Filed by sedaredgar.com - Nord Resources Corp. - Exhibit 10.1






AMENDED AND RESTATED CREDIT AGREEMENT 

dated as of June 30, 2008 

by and among

NORD RESOURCES CORPORATION 
as Borrower,

and

COCHISE AGGREGATES AND MATERIALS, INC. 
as Guarantor,

THE LENDERS FROM TIME TO TIME PARTY HERETO 
as Lenders

and

NEDBANK LIMITED, 
as Administrative Agent

___________________________

NEDBANK LIMITED, 
as Sole Lead Arranger




TABLE OF CONTENTS

	  	  	Page 
	  	  	  
	
     
      ARTICLE I. DEFINITIONS
  
      	1 
	Section 1.1. 	Defined Terms 	1 
	Section 1.2. 	Terms
      Generally 	15 
	Section 1.3. 	Accounting Terms; GAAP
    	15 
	
      ARTICLE II. THE TERM LOANS
    	15 
	Section 2.1. 	Term Loans 	15 
	Section 2.2. 	Borrowings
      	16 
	Section 2.3. 	Requests for Borrowings
    	16 
	Section 2.4. 	Funding of
      Borrowings 	16 
	Section 2.5. 	Termination and Reduction of
      Term Loan Commitments 	17 
	Section 2.6. 	Repayment of
      Term Loans 	17 
	Section 2.7. 	Evidence of Debt 	17 
	Section 2.8. 	Optional
      Prepayments of Term Loans 	18 
	Section 2.9. 	Mandatory Prepayments
	18 
	Section 2.10. 	Fees 	19 
	Section 2.11. 	Interest 	20 
	Section 2.12. 	Alternate
      Rate of Interest 	20 
	Section 2.13. 	Increased Costs 	21 
	Section 2.14. 	Break
      Funding Payments 	22 
	Section 2.15. 	Taxes 	22 
	Section 2.16. 	Payments
      Generally; Pro Rata Treatment; Sharing of Set-offs 	23 
	Section 2.17. 	Mitigation Obligations
    	25 
	
      ARTICLE III. REPRESENTATIONS
      AND WARRANTIES 	25 
	Section 3.1. 	Status and Power 	25 
	Section 3.2. 	Authorization; Enforceability 	25 
	Section 3.3. 	No Conflicts 	25 
	Section 3.4. 	Financial
      Statements 	26 
	Section 3.5. 	Feasibility Study 	26 
	Section 3.6. 	Litigation,
      etc 	26 
	Section 3.7. 	Title to Assets 	26 


i




TABLE OF CONTENTS 
(continued)

	  	  	Page 
	  	  	  
	Section 3.8.	Conduct of
      Business 	26
  
	Section 3.9.	Labor and Employment Matters
      	26 
	Section 3.10.	No Default
      	27
  
	Section 3.11.	Tax Returns and Taxes
	27 
	Section 3.12.	Withholding
      and Other Taxes 	27
  
	Section 3.13.	Material Contracts 	27 
	Section 3.14. 	Compliance
      with Environmental Laws 	27
  
	Section 3.15. 	Solvency 	28 
	Section 3.16. 	Locations of
      Tangible Assets 	28
  
	Section 3.17. 	Consents and Approvals for
      the Project 	28 
	Section 3.18. 	Consents and
      Approvals for the Security 	28
  
	Section 3.19. 	Capitalization of the
      Borrower 	28 
	Section 3.20. 	Subsidiaries
      	28
  
	Section 3.21. 	Mining Properties 	29 
	Section 3.22. 	Feasibility
      Study 	29
      
	Section
      3.23. 	Financial
      Model, Construction Schedule and Capital Spending Plan 	29 
	Section
      3.24. 	Project
      Information 	29
      
	Section
      3.25. 	Intellectual
      Property 	29
      
	Section
      3.26. 	Liens
      	30
      
	Section
      3.27. 	Insurance
      	30
      
	Section
      3.28. 	Ranking
      	30
      
	
      ARTICLE IV. CONDITIONS 	30
      
	Section
      4.1. 	Closing
      Date 	30
      
	Section
      4.2. 	Additional
      Conditions 	33
      
	
     ARTICLE V. AFFIRMATIVE COVENANTS 	33
      
	Section
      5.1. 	Financial
      Statements; Ratings Change and Reporting 	33
      
	Section
      5.2. 	Notices
      of Material Events 	35
      
	Section
      5.3. 	Existence;
      Conduct of Business 	36
      
	Section
      5.4. 	Payment
      of Obligations 	36
      


ii




TABLE OF CONTENTS 
(continued)

	  	  	Page
      
	  	  	  
	Section
      5.5. 	Maintenance
      of Properties; Insurance 	36
      
	Section
      5.6. 	Books
      and Records; Inspection Rights 	36
      
	Section
      5.7. 	Compliance
      with Laws 	36
      
	Section
      5.8. 	Use
      of Proceeds 	36
      
	Section
      5.9. 	Project;
      Construction; Etc 	37
      
	Section
      5.10. 	Updated
      Financial Model 	37
      
	Section
      5.11. 	Further
      Assurances 	38
      
	
      ARTICLE VI. NEGATIVE COVENANTS 	38
      
	Section
      6.1. 	Indebtedness
      	38
      
	Section
      6.2. 	Liens
      	38
      
	Section
      6.3. 	Fundamental
      Changes; Dispositions; Subsidiaries; Etc 	38
      
	Section
      6.4. 	Investments,
      Loans, Advances, Guarantees and Acquisitions 	39
      
	Section
      6.5. 	Hedging
      Agreements 	39
      
	Section
      6.6. 	Restricted
      Payments 	39
      
	Section
      6.7. 	Transactions
      with Affiliates 	39
      
	Section
      6.8. 	Restrictive
      Agreements 	39
      
	Section
      6.9. 	Material
      Contracts 	40
      
	Section
      6.10. 	Financial
      Covenants 	40
      
	
      ARTICLE VII. EVENTS OF DEFAULT 	40
      
	
      ARTICLE VIII. THE ADMINISTRATIVE AGENT 
	42
      
	
      ARTICLE IX. GUARANTY 	44
      
	Section
      9.1. 	Guaranty
      	44
      
	Section
      9.2. 	Guaranty
      Absolute 	44
      
	Section
      9.3. 	Waiver
      	45
      
	Section
      9.4. 	Continuing
      Guaranty; Assignments 	45
      
	Section
      9.5. 	Subrogation
      	46
      
	Section
      9.6. 	Maximum
      Obligations 	46
      
	
      ARTICLE X. MISCELLANEOUS 	47
      
	Section
      10.1. 	Notices
      	47
      
	Section
      10.2. 	Waivers;
      Amendments 	47
      


iii




TABLE OF CONTENTS 
(continued)

	  	  	Page
      
	  	  	  
	Section
      10.3. 	Expenses;
      Indemnity; Damage Waiver 	48
      
	Section
      10.4. 	Successors
      and Assigns 	49
      
	Section
      10.5. 	Survival
      	52
      
	Section
      10.6. 	Counterparts;
      Integration; Effectiveness 	52
      
	Section
      10.7. 	Severability
      	53
      
	Section
      10.8. 	Right
      of Setoff 	53
      
	Section
      10.9. 	Governing
      Law; Jurisdiction; Consent to Service of Process 	53
      
	Section
      10.10. 	WAIVER
      OF JURY TRIAL 	54
      
	Section
      10.11. 	Headings
      	54
      
	Section
      10.12. 	Confidentiality
      	54
      
	Section
      10.13. 	Interest
      Rate Limitation 	55
      
	Section
      10.14. 	Know
      Your Customer Requirements 	55
      


iv




SCHEDULES:

Schedule 1.1 -- Material Contracts 
Schedule 2.1 -- Term
Loan Commitments 
Schedule 6.2 -- Existing Liens

EXHIBITS:

Exhibit A -- Form of Assignment and Assumption 
Exhibit B --
Form of Term Loan Borrowing Request 
Exhibit C -- Form of Collateral Account
Agreement 
Exhibit D -- Form of Deed of Trust 
Exhibit E -- Form of Excess
Cash Flow Certificate




AMENDED AND RESTATED CREDIT AGREEMENT

     AMENDED AND RESTATED CREDIT
AGREEMENT dated as of June 30, 2008, among NORD RESOURCES CORPORATION, a Delaware
corporation (the “Borrower”), and COCHISE AGGREGATES AND MATERIALS, INC.,
a Nevada corporation (“Cochise”, a “Guarantor”), the lenders from
time to time party hereto (each a “Lender” and collectively, the
“Lenders”), and NEDBANK LIMITED, as administrative agent (in such
capacity, the “Administrative Agent”) and as sole lead arranger (in such
capacity, the “Sole Lead Arranger”).

     WHEREAS the Borrower, the
Guarantor, the Lenders and the Administrative Agent entered into certain Credit
Agreement dated June 17, 2007 to provide to the Borrower a term loan facility to
assist in financing the construction, start-up, and operation of mining and
metal operations at the Johnson Camp Mine, a copper mine and production facility
located 65 miles east of Tuscon, Arizona in Cochise County (the “Original
Agreement”);

     WHEREAS the Borrower has amended
its mine plan as a result of unexpected guidance provided to the Borrower by the
Arizona Department of Environmental Quality;

     WHEREAS it is therefore necessary
that certain of the time periods provided for in the Original Agreement be
extended or otherwise varied, which extensions the Lenders are prepared to grant
subject to certain conditions;

     WHEREAS the parties have
accordingly agreed to cause the Original Agreement to be amended and restated as
set forth herein;

     NOW THEREFORE, in consideration
of the foregoing recitals, the mutual agreements contained herein and for other
good and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the parties hereto agree as follows:

ARTICLE I. 
DEFINITIONS

     SECTION 1.1. Defined
Terms. As used in this Agreement, the following terms have the meanings
specified below:

     “Administrative Agent”
means Nedbank Limited, in its capacity as administrative agent for the Lenders
hereunder.

     “Affiliate” means, with
respect to a specified Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.

     “Applicable Law” means all
public laws, statutes, ordinances, decrees, judgments, codes, standards, acts,
orders, by-laws, rules, regulations, Approvals, permits and requirements of any
Governmental Authority, in each case having the force of law and which now or
hereafter may be lawfully applicable to and enforceable against any Loan Party
or its property or any part thereof.




     “Applicable Percentage”
means, with respect to any Lender, the percentage of the total Term Loan
Commitments represented by such Lender’s Term Loan Commitment. If the Term Loan
Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Term Loan Commitments most recently in effect, giving
effect to any assignments.

     “Applicable Margin” means
(a) prior to Completion, 3.5% per annum, and (b) after Completion, 3.0% per
annum.

     “Approvals” means each and
every approval, order in council, authorization, license, permit, consent,
filing and registration by or with any Governmental Authority or other Person
which are required by Applicable Law and necessary to authorize or permit the
development and operation of the Project and the execution, delivery,
performance, validity and enforceability of the Loan Documents or the Material
Contracts.

     “Assignment and
Assumption” means an assignment and assumption entered into by a Lender and
an assignee (with the consent of any party whose consent is required by Section
10.4), and accepted by the Administrative Agent, in the form of Exhibit A
or any other form approved by the Administrative Agent.

     “Availability Period”
means the period from and including the Closing Date to but excluding the
earlier of (a) the date of termination of the Term Loan Commitments, (b) the
first Principal Payment Date and (c) December 31, 2008.

     “Board” means the Board of
Governors of the Federal Reserve System of the United States of America.

     “Borrower” has the meaning
set forth in the recitals hereto.

     “Borrowing” means a
borrowing of Term Loans.

     “Business Day” means any
day that is not a Saturday, Sunday or other day on which commercial banks in New
York City are authorized or required by law to remain closed; provided
that, when used in connection with a Eurodollar Loan, the term “Business
Day” shall also exclude any day on which banks are not open for dealings in
dollar deposits in the London interbank market.

     “CADS” means, for a
particular period, (a) gross revenues for such period (for any future period,
calculated (i) using the actual hedged price for future hedged production and
(ii) the unhedged price for unhedged production, with the unhedged price being
the Historic Six Month Average Spot Price at such time) less (b) the sum of (i)
the aggregate of Project Development Costs for such period, (ii) cash Tax
Expenses for such period, and (iii) cash Operating Costs for such period, and
(c) adjusted for changes in Working Capital over such period (plus any increases
and minus any decreases).

     “Capital Expenditures”
means, for a particular period, the aggregate of all expenditures by the
Borrower during such period that, in accordance with GAAP, are classified as
capital expenditures.

- 2 -




     “Capital Lease
Obligations” of any Person means the obligations of such Person to pay rent
or other amounts under any lease of (or other arrangement conveying the right to
use) real or personal property, or a combination thereof, which obligations are
required to be classified and accounted for as capital leases on a balance sheet
of such Person under GAAP, and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with GAAP.

     “Casualty Event” means,
with respect to any Property of any Person, any loss of or damage to, or any
condemnation or other taking of, such Property for which such Person receives
insurance proceeds, or proceeds of a condemnation award or other
compensation.

     “Change of Control” means
(a) Cochise shall cease to be a direct wholly-owned subsidiary of the Borrower;
or (b) the Administrative Agent, for the benefit of the Lenders, shall cease to
have a perfected security interest in Equity Interests of Cochise representing
100% of the aggregate equity value represented by the issued and outstanding
Equity Interests in Cochise.

     “Change in Law” means (a)
the adoption of any law, rule or regulation after the date of this Agreement,
(b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this
Agreement or (c) compliance by any Lender (or, for purposes of Section 2.13(b),
by any lending office of such Lender or by such Lender’s holding company, if
any) with any request, guideline or directive (whether or not having the force
of law) of any Governmental Authority made or issued after the date of this
Agreement.

     “Closing Date” means the
second Business Day after which the conditions specified in Section 4.1 are
satisfied (or waived in accordance with Section 10.2) .

     “Cochise” has the meaning
in the recitals hereto. 

     “Code” means the Internal
Revenue Code of 1986, as amended from time to time.

     “Collateral” means a
collective reference to all real and personal property with respect to which
Liens have been granted in favor of the Administrative Agent pursuant to and in
accordance with the Security Documents.

     “Collateral Account
Agreement” means the Collateral Account Agreement in the form attached as
Exhibit C hereto.

     “Collateral Accounts”
shall have the meaning set forth in the Collateral Account Agreement.

     “Completion” means the
earlier to occur of the date upon which the Borrower has delivered the
Completion Certificates to the Administrative Agent, duly executed by the
Borrower, and verified by the Independent Technical Consultant, and such
certificates shall have been accepted by the Administrative Agent.

- 3 -




     “Completion Certificates”
shall mean, collectively, the forms of certificates relating to Completion which
shall be in a form satisfactory to the Borrower, the Administrative Agent, and
the Independent Technical Consultant.

     “Completion Date” means
the date upon which Completion occurs.

     “Consent Agreements”
means, collectively, the agreements so named, entered into or to be entered into
between the Lenders, the Administrative Agent, the Borrower and each of the
counterparties to each Material Contract with a value in excess of $1,000,000
(as determined by the Administrative Agent in consultation with the Borrower)
pursuant to which, inter alia, such counterparties consent to the Security and
grant to the Lenders or their nominee certain “step-in” rights.

     “Construction Schedule and
Capital Spending Plan” means the Borrower’s construction schedule and
capital spending plan, dated June 20, 2007, as the same may be modified by the
Borrower and approved by the Required Lenders.

     “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto.

     “Debt Issuance” means the
issuance of any Indebtedness by any Loan Party other than the issuance of any
Indebtedness permitted under Section 6.1. 

     “Debt Service Charges”
means, for a particular period, the sum of all scheduled principal payments made
or required to have been made by the Borrower hereunder with respect to Term
Loans during such period and interest on such Term Loans paid or required to
have been paid by the Borrower during such period.

     “Debt Service Coverage
Ratio” means, (a) with respect to a particular Historical Test Period, the
ratio of (i) CADS for such Test Period to (ii) Debt Service Charges for such
Test Period (as determined with respect to the financial statements most
recently delivered pursuant to Section 5.1(a) and (b) hereof); and (b) with
respect to a particular Future Test Period, the ratio of (i) CADS for such Test
Period to (ii) Debt Service Charges for such Test Period (as determined with
respect to the Financial Model then in effect).

     “Debt Service Reserve
Account” has the meaning set forth in the Collateral Account Agreement.

     “Deed of Trust’ means the
Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing in the
form of Exhibit D, hereto.

     “Default” means any event
or condition which constitutes an Event of Default or which upon notice, lapse
of time or both would, unless cured or waived, become an Event of Default.

- 4 -




     “Disclosure Schedule”
means the disclosure schedule that has been prepared by the Borrower, delivered
by the Borrower to the Lender, and dated as of June 17, 2007, as supplemented by
the updates provided by the Borrower to the Lender from and after such
date..

     “Disposition” or
“Dispose” means the sale, transfer, license, lease or other disposition
(including any sale and leaseback transaction) of any property by any Person,
including any sale, assignment, transfer or other disposal, with or without
recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

     “dollars” or “$”
refers to lawful money of the United States of America.

     “EBIT” means, for a
particular period, Net Income for such period plus, to the extent deducted in
determining such Net Income and without duplication, the aggregate of the (a)
Interest Expenses for such period, and (b) Tax Expenses for such period,
determined in each case in accordance with GAAP.

     “Environmental Laws” means
all laws, rules, regulations, codes, ordinances, orders, decrees, judgments,
injunctions, notices or binding agreements issued, promulgated or entered into
by any Governmental Authority, relating in any way to the environment,
preservation or reclamation of natural resources, the management, release or
threatened release of any Hazardous Material or to health and safety
matters.

     “Environmental Liability”
means any liability, contingent or otherwise (including any liability for
damages, costs of environmental remediation, fines, penalties or indemnities),
of the Borrower directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

     “Environmental Plan” means
the Compliance Order dated September 7, 2002 issued by the Arizona Department of
Environmental Quality, as the same may be modified, replaced, or superceded
(including, without limitation, by the appropriate Aquifer Protection
Permit).

     “Equity Interests” means
shares of equity interest, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity
ownership interests in a Person, and any warrants, options or other rights
entitling the holder thereof to purchase or acquire any such equity
interest.

     “Equity Issuance” means
any issuance by the Borrower to any Person (other than a Loan Party) of shares
of its Equity Interests.

     “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended from time to time.

     “ERISA Affiliate” means
any trade or business (whether or not incorporated) that, together with the
Borrower, is treated as a single employer under Section 414(b) or (c) of the


- 5 -




Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.

     “ERISA Event” means (a)
any “reportable event”, as defined in Section 4043 of ERISA or the regulations
issued thereunder with respect to a Plan (other than an event for which the
30-day notice period is waived); (b) the existence with respect to any Plan of
an “accumulated funding deficiency” (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section
412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of
the minimum funding standard with respect to any Plan; (d) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA
with respect to the termination of any Plan; (e) the receipt by the Borrower or
any ERISA Affiliate from the PBGC or a plan administrator of any notice relating
to an intention to terminate any Plan or Plans or to appoint a trustee to
administer any Plan; (f) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal
from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Borrower or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.

     “Event of Default” has the
meaning assigned to such term in Article VII.

     “Excluded Taxes” means,
with respect to the Administrative Agent, any Lender or any other recipient of
any payment to be made by or on account of any obligation of the Borrower
hereunder, (a) income or franchise taxes imposed on (or measured by) its net
income by the United States of America, or by the jurisdiction under the laws of
which such recipient is organized or in which its principal office is located
or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which the Borrower is
located and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Borrower under Section 2.17(b)), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office) or
is attributable to such Foreign Lender’s failure to comply with Section 2.15(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrower with respect to such withholding
tax pursuant to Section 2.15(a) .

     “Excess Cash Flow” means,
at any particular time and from time to time, the amount identified in the
Excess Cash Flow Certificate. 

     “Excess Cash Flow
Certificate” means a certificate of a Financial Officer of the Borrower
substantially in the form of Exhibit E hereto.

     “Existing Bridge Loan
Facility” means the loan evidenced by the $4,900,000 Amended and Restated
Secured Promissory Note dated May 31, 2006 between the Borrower and Nedbank
Limited, as the same may be amended and modified from time to time.

- 6 -




     “Feasibility Study” means
the Feasibility Study, dated September 2007, prepared by Bikerman Engineering
& Technology Associates, Inc.. 

     “Fee Letter” means the fee
letter dated June 27, 2007 between the Borrower and Nedbank Limited, as the same
may be amended, modified, supplemented or replaced from time to time.

     “Financial Model” means
the financial model dated June 20, 2007, as the same may be modified from time
to time in accordance with Section 5.10.

     “Financial Officer” means
the chief financial officer, principal accounting officer, treasurer or
controller of the Borrower.

     “Foreign Lender” means any
Lender that is organized under the laws of a jurisdiction other than that in
which the Borrower is located. For purposes of this definition, the United
States of America, each State thereof and the District of Columbia shall be
deemed to constitute a single jurisdiction.

     “Forward Sale Price Protection
Program” means a hedging program with respect to a specified percentage of
copper output from the Project which shall be entered into prior to the Closing
Date and which shall be in form and substance satisfactory to the Borrower and
the Administrative Agent.

     “Future Test Periods”
means with respect to any Test Date, the period of four consecutive fiscal
quarters ending on each of the next four succeeding Test Dates.

     “GAAP” means generally
accepted accounting principles in the United States of America.

     “Governmental Authority”
means the government of the United States of America, any other nation or any
political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

     “Guarantee” of or by any
Person (the “guarantor”) means any obligation, contingent or otherwise,
of the guarantor guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such
Indebtedness or other obligation of the payment thereof or (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation; provided, that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business.

     “Guarantor” means
Cochise.

- 7 -




     “Hazardous Materials”
means all explosive or radioactive substances or wastes and all hazardous or
toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.

     “Hedging Agreement” means
any present or future swap, hedging, foreign exchange or cash management
agreement or other derivative transaction entered into by any Loan Party which
constitutes any copper or commodity hedging transaction, spot or forward foreign
exchange transaction, interest rate swap transaction, currency swap transaction,
forward rate transaction, rate cap transaction, rate floor transaction, rate
collar transaction, and any other exchange or rate protection transaction, any
combination of such transactions or any option with respect to any such
transaction entered into by any Loan Party.

     “Historic Six Month Average
Spot Price” means, for any day, the average of the closing spot price for
copper on New York Comex for each Business Day over the six-month period ending
on such day. 

     “Historical Test Period”
means the period of four consecutive fiscal quarters of the Borrower ending on a
Test Date; provided that for purposes of calculating the Debt Service
Coverage Ratio and Interest Coverage Ratio for each of the first three
applicable Test Dates after Completion, the amount of each of CADS, Debt Service
Charges, EBIT and Interest Expense for purposes of such calculations shall be
determined as follows: (a) for the first Test Date, such amounts shall equal the
amounts for the most recently ended fiscal quarter multiplied by 4, (b) for the
second Test Date, such amounts shall equal the amount for the two most recently
ended fiscal quarters multiplied by 2; and (c) for the third Test Date, such
amounts shall equal the amount for the three most recently ended fiscal quarters
multiplied by 3/4.

     “Indebtedness” of any
Person means, without duplication, (a) all obligations of such Person for
borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person upon which interest charges are
customarily paid, (d) all obligations of such Person under conditional sale or
other title retention agreements relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable incurred in the
ordinary course of business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (g)
all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease
Obligations of such Person, (i) all obligations, contingent or otherwise, of
such Person as an account party in respect of letters of credit and letters of
guaranty and (j) all obligations, contingent or otherwise, of such Person in
respect of bankers’ acceptances. The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.

- 8 -




     “Indemnified Taxes” means
Taxes other than Excluded Taxes.

     “Independent Technical
Consultant” means the technical engineering consultant as the Administrative
Agent, in consultation with the Borrower, may engage from time to time to
monitor the Borrower’s construction under and compliance with the Construction
Schedule and Capital Spending Plan, certify the passage of the Completion tests
and otherwise carry out the responsibilities of the Independent Technical
Consultant under the Loan Documents.

     “Initial Financial Model”
has the meaning set forth in Section 5.10(a) .

     “Intellectual Property”
shall mean all issued patents and patent applications, industrial design
registrations, trade-marks, registrations and applications therefor, trade-names
and styles, logos, copyright registrations and applications therefor, all of the
foregoing owned by or licensed to the Loan Parties or any of them and used in or
necessary to the operation of the Project.

     “Interest Coverage Ratio”
means (a) with respect to a particular Historical Test Period, the ratio of (i)
EBIT for such Test Period to (ii) Interest Expense for such Test Period (as
determined with respect to the financial statements most recently delivered
pursuant to Section 5.1(a) and (b) hereof); and (b) with respect to a particular
Future Test Period, the ratio of (i) EBIT for such Test Period to (ii) Interest
Expense for such Test Period (as determined with respect to the Financial Model
then in effect); provided that any such calculation shall be effected
without regard to the effect of any non-cash expense associated with the $23
million equity financing.

     “Interest Expense” means,
for any particular period, the aggregate amount which would be classified on the
income statement of the Borrower for such period as interest expenses (whether
expensed or capitalized or in respect of synthetic lease obligations), all as
determined in accordance with GAAP.

     “Interest Payment Date”
means the last Business Day of each of March, June, September and December in
each year.

     “Interest Period” means,
with respect to any Borrowing, (a) the period from and including the date of
such Borrowing to but excluding the first Interest Payment Date occurring after
such Borrowing, and (b) thereafter, the period from and including the first
Interest Payment Date for such Borrowing, to but excluding the next Interest
Payment Date.

     “Lenders” has the meaning
set forth in the recitals hereto.

     “LIBOR Rate” means (a) the
rate of interest per annum, calculated on the basis of a year of 360 days,
determined by the Administrative Agent for a particular Interest Period to be
the rate of interest per annum that appears as such on the Telerate Screen Page
3750 at 11:00 a.m. (London time) on the second Business Day prior to the
commencement of such Interest Period, (b) if, for any reason, such rate does not
appear on such Telerate Page, the rate of interest per annum, calculated on the
basis of a year of 360 days, determined by the Administrative Agent for a
particular Interest Period to be the rate of interest per annum that appears as
such on the Reuters Page LIBOR01 at 11:00 a.m. (New York City time) on the
second Business Day prior to the commencement of such Interest Period, or (c)
if, for any reason, such rate does not appear on 

- 9 -




such Telerate or Reuters Pages, LIBOR shall mean the rate of
interest per annum, calculated on the basis of a year of 360 days and rounded
upwards if necessary to the nearest whole multiple of 1/16% determined by the
Administrative Agent as being the rate of interest at which the Administrative
Agent, in accordance with its normal practices, would be prepared to offer to
leading banks in the London interbank market for delivery on the first day of
each relevant Interest Period for a period equal to the relevant Interest Period
based on the number of days comprised therein, deposits in U.S. dollars of
comparable amounts to the amount of the Term Loan, to be outstanding during the
Interest Period, at or about 11:00 am (London time) on the second Business Day
prior to the commencement of such Interest Period.

     “Lien” means, with respect
to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation,
encumbrance, charge or security interest in, on or of such asset, (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement (or any financing lease having substantially
the same economic effect as any of the foregoing) relating to such asset and (c)
in the case of securities, any purchase option, call or similar right of a third
party with respect to such securities.

     “Loan Documents” means
this Agreement, the Security Documents, and the Fee Letter. 

     “Loan Party” means each of
the Borrower and the Guarantor.

     “Material Adverse Effect”
means a material adverse effect on (a) the business, assets, operations,
prospects or condition, financial or otherwise, of the Project or any Loan
Party, (b) the ability of any Loan Party to perform any of its obligations under
this Agreement or (c) the rights of or benefits available to the Lenders under
the Loan Documents.

     “Material Contracts” means
the material contracts set forth on Schedule 1.1, and any other contract which,
in the event of a breach, could reasonably be expected to result in a Material
Adverse Effect, as determined by the Administrative Agent in consultation with
the Borrower.

     “Material Indebtedness”
means Indebtedness (other than the Term Loans), or obligations in respect of one
or more Hedging Agreements, of any one or more of any Loan Party in an aggregate
principal amount exceeding $200,000. For purposes of determining Material
Indebtedness, the “principal amount” of the obligations of any Loan Party in
respect of any Hedging Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that such Loan Party would be
required to pay if such Hedging Agreement were terminated at such time.

     “Mining Properties” means
the real property pledged to the Administrative Agent for the benefit of the
Lenders pursuant to the Security Documents.

     “Moody’s” means Moody’s
Investors Service, Inc.

     “Multiemployer Plan” means
a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

- 10 -




     “Net Cash Proceeds”
means:

     (a) with respect to any
Disposition, the excess, if any, of (i) the sum of cash and cash equivalents
received in connection with such Disposition less (ii) the sum of (x) the
out-of-pocket expenses incurred by the Borrower in connection with such
Disposition and (y) taxes reasonably estimated to be actually payable in
connection therewith;

     (b) with respect to any Casualty
Event, the excess, if any, of (i) the sum of insurance proceeds or other
condemnation award received (other than any amounts received in connection with
business interruption insurance) in connection with such Casualty Event
less (ii) the sum of any reasonable expenses incurred in connection
therewith; and

     (c) with respect to any Debt
Issuance, the excess, if any, of (i) all cash received in connection with such
Debt Issuance less (ii) the sum of all reasonable expenses by the
Borrower incurred in connection therewith;

     “Net Income” means, for a
particular period, the aggregate amount which would be classified on the income
statement of the Borrower for such period as net income, determined in
accordance with GAAP; provided that Net Income shall be inclusive of
extraordinary, unusual and non-recurring items to the extent received or paid in
cash and exclusive of extraordinary, unusual and non-recurring items to the
extent not received or paid in cash.

     “Obligations” means all
indebtedness, obligations and liabilities, present or future, absolute or
contingent, matured or not, at any time owing by a Loan Party to a Lender or the
Administrative Agent under or in connection with the Loan Documents or any
Hedging Agreement.

     “Operating Costs” means,
for any period, the sum, computed without duplication, of all consolidated costs
and expenses (including, without limitation, costs relating to corporate
overhead, salaries, insurance, board expenses, legal expenses, deferred
salaries, and expenses in connection with letters of credit) paid directly or
indirectly by the Borrower during such period (or, in the case of any future
period, projected to be paid or payable during such period) in connection with
the operation, maintenance and administration of the Project.

     “Other Taxes” means any
and all present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies arising from any payment made
hereunder or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement.

     “Participant” has the
meaning set forth in Section 10.4.

     “PBGC” means the Pension
Benefit Guaranty Corporation referred to and defined in ERISA and any successor
entity performing similar functions.

     “Permitted Investments”
means:

     (a) direct obligations of, or
obligations the principal of and interest on which are unconditionally
guaranteed by, the United States of America (or by any agency thereof to the


- 11 -




extent such obligations are backed by the full faith and credit
of the United States of America), in each case maturing within one year from the
date of acquisition thereof;

     (b) investments in commercial
paper maturing within 270 days from the date of acquisition thereof and having,
at such date of acquisition, the highest credit rating obtainable from S&P
or from Moody’s;

     (c) investments in certificates
of deposit, banker’s acceptances and time deposits maturing within 180 days from
the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic office of any
commercial bank organized under the laws of the United States of America or any
State thereof which has a combined capital and surplus and undivided profits of
not less than $500,000,000;

     (d) fully collateralized
repurchase agreements with a term of not more than 30 days for securities
described in clause (a) above and entered into with a financial institution
satisfying the criteria described in clause (c) above; and

     (e) money market funds that (i)
comply with the criteria set forth in Securities and Exchange Commission Rule
2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and
Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000.

     (f) any deposits of the type
described in clause (d) of “Permitted Liens”

     “Permitted Liens” means
Liens:

     (a) imposed by law for taxes that
are not yet due or are being contested in compliance with Section 5.4;

     (b) carriers’, warehousemen’s,
mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law,
arising in the ordinary course of business and securing obligations that are not
overdue by more than 30 days or are being contested in compliance with Section
5.4;

     (c) pledges and deposits made in
the ordinary course of business in compliance with workers’ compensation,
unemployment insurance and other social security laws or regulations;

     (d) deposits to secure the
performance of bids, trade contracts, leases, statutory obligations, surety and
appeal bonds, performance bonds, letters of credit and other obligations of a
like nature, in each case in the ordinary course of business;

     (e) judgment liens in respect of
judgments that do not constitute an Event of Default under clause (k) of Article
VII; and

     (g) easements, zoning
restrictions, rights-of-way and similar encumbrances on real property imposed by
law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business of the
Borrower;

- 12 -




provided that the term “Permitted Liens” shall not
include any Lien securing Indebtedness.

     “Person” means any natural
person, corporation, limited liability company, trust, joint venture,
association, company, partnership, Governmental Authority or other entity.

     “Plan” means any employee
pension benefit plan (other than a Multiemployer Plan) subject to the provisions
of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in
respect of which the Borrower or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as
defined in Section 3(5) of ERISA.

     “Principal Payment Dates”
means the last Business Day of March, June, September, and December in each
year, starting with the first such date at least 15 months after the first
drawdown (the “First Principal Payment Date”) and ending on the date that
is 45 months after the First Principal Payment Date.

     “Proceeds Account” has the
meaning set forth in the Collateral Account Agreement.

     “Project” means the
construction, startup and operation by the Borrower of the Johnson Camp Mine, a
copper mine and production facility located 65 miles east of Tucson, Arizona, as
described in the Feasibility Study and as augmented by the Construction Schedule
and Capital Spending Plan and Financial Model.

     “Project Development
Costs” means amounts (other than Operating Expenses) spent pursuant to
Material Contracts and the Construction Schedule and Capital Spending Plan.

     “Register” has the meaning
set forth in Section 10.4.

     “Related Parties” means,
with respect to any specified Person, such Person’s Affiliates and the
respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.

     “Required Lenders” means,
at any time, Lenders having Term Loans and unused Term Loan Commitments
representing more than 50% of the sum of the total Term Loans and unused Term
Loan Commitments at such time.

     “Restricted Payment” means
(a) any dividend or other distribution (whether in cash, securities or other
property) with respect to any Equity Interests in the Borrower, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such Equity Interests in the
Borrower or any option, warrant or other right to acquire any such Equity
Interests in the Borrower, and (b) any other expenditures not constituting
Project Development Costs or Operating Costs, including, without limitation, any
amounts expended with respect to (x) exploration at the Coyote Springs site in
an amount in excess of $1,500,000 during the Availability Period, and (y)
exploration at the Mimbres site in an amount in excess of $100,000 during the
Availability Period.

     “S&P” means Standard
& Poor’s.

- 13 -




     “Secured Parties” means
the Administrative Agent and the Lenders. 

     “Security” means the
collateral security constituted by the Security Documents.

     “Security Documents” means
the Deed of Trust, the Collateral Account Agreement, the Consent Agreements and
such other security documents and instruments, including without limitation
Uniform Commercial Code financing statements, as may be executed and/or
delivered by the Loan Parties pursuant to the terms hereunder or any collateral
document which, in each case, shall be deemed executed and delivered for the
benefit of the Administrative Agent and the Lenders.

     “Solvent” and
“Solvency” mean, with respect to any Person on any date of determination,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including contingent liabilities, of such
Person, (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person’s ability to pay such debts and liabilities as they mature,
(d) such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person’s property would
constitute an unreasonably small capital, and (e) such Person is able to pay its
debts and liabilities, contingent obligations and other commitments as they
mature in the ordinary course of business. The amount of contingent liabilities
at any time shall be computed as the amount that, in the light of all the facts
and circumstances existing at such time, represents the amount that can be
reasonably be expected to become an actual or matured liability.

     “Start-up of Commercial
Production” means the earliest date on which the Borrower has produced at
least three million pounds of saleable copper cathodes.

     “subsidiary” means, with
respect to any Person (the “parent”) at any date, any corporation,
limited liability company, partnership, association or other entity the accounts
of which would be consolidated with those of the parent in the parent’s
consolidated financial statements if such financial statements were prepared in
accordance with GAAP as of such date, as well as any other corporation, limited
liability company, partnership, association or other entity (a) of which
securities or other ownership interests representing more than 50% of the equity
or more than 50% of the ordinary voting power or, in the case of a partnership,
more than 50% of the general partnership interests are, as of such date, owned,
controlled or held, or (b) that is, as of such date, otherwise Controlled, by
the parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent.

     “Taxes” means any and all
present or future taxes, levies, imposts, duties, deductions, charges or
withholdings imposed by any Governmental Authority.

     “Term Loans” has the
meaning set forth in Section 2.1.

     “Term Loan Borrowing
Request” means a borrowing request substantially in the form Exhibit B.

- 14 -




     “Term Loan Commitment”
means the commitment of such Lender to make Term Loans hereunder, as such amount
may be reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 10.4. The initial amount of each Lender’s Term
Loan Commitment is set forth on Schedule 2.1, or in the assignment and
assumption pursuant to which such Lender shall have assumed its Term Loan
Commitment, as applicable. The initial aggregate amount of the Term Loan
Commitment is $25,000,000, which amount may be reduced by the Borrower in
accordance with Section 2.5(b) .

     “Test Date” means the last
day of December, March, June, and September of each year, commencing from the
date on which Completion occurs or the first such date at least 12 months after
the first drawdown, whichever is earlier, until the final Principal Payment
Date.

     “Transactions” means (a)
the execution, delivery and performance by the Loan Parties of (i) the Loan
Documents, the Borrowing and the use of the proceeds thereof, and (ii) the
Material Contracts, and (b) the development of the Project by the Borrower.

     “Withdrawal Liability”
means liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.

     “Working Capital” means,
at any particular time, (a) the amount which would be classified on the balance
sheet of the Borrower at such time as current assets, minus (b) the
amount which would be classified on the balance sheet of the Borrower at such
time as current liabilities (other than the current portion of long-term debt),
in each case determined in accordance with GAAP.

     SECTION 1.2. Terms
Generally. The definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words “include”, “includes” and “including” shall be deemed to
be followed by the phrase “without limitation”. The word “will” shall be
construed to have the same meaning and effect as the word “shall”. Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
“asset” and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.

     SECTION 1.3. Accounting Terms;
GAAP. Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time; provided that, if the Borrower notifies the
Administrative 

- 15 -




Agent that the Borrower requests an amendment to any provision
hereof to eliminate the effect of any change occurring after the date hereof in
GAAP or in the application thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith.

ARTICLE II. 
THE TERM LOANS

     SECTION 2.1. Term Loans.
Subject to the terms and conditions set forth herein, each Lender agrees to make
available to the Borrower during the Availability Period, loans (“Term
Loans”) in an aggregate principal amount that will not result in a Lender
exceeding such Lender’s Term Loan Commitment. The Term Loan is not revolving in
nature, and any portion thereof that is repaid or prepaid cannot be reborrowed.
Borrowings may occur from time to time but not more frequently than once per
calendar month. 

     SECTION 2.2.
Borrowings.

     (a) Each Term Loan shall be made
as part of a Borrowing consisting of Term Loans made by the Lenders ratably in
accordance with their respective Term Loan Commitments. The failure of any
Lender to make any Term Loan required to be made by it shall not relieve any
other Lender of its obligations hereunder; provided that the Term Loan
Commitments of the Lenders are several and no Lender shall be responsible for
any other Lender’s failure to make Term Loans as required.

     (b) Each Lender at its option may
make any Term Loan by causing any branch or Affiliate of such Lender to make
such Term Loan; provided that any exercise of such option shall not
affect the obligation of such Lender hereunder to make such Term Loan or the
obligation of the Borrower to repay such Term Loan in accordance with the terms
of this Agreement; and provided further that any such Lender shall in any
event be subject to Section 2.17.

     (c) Each Borrowing shall be in an
aggregate amount that is an integral multiple of $100,000 and not less than
$2,500,000.

     SECTION 2.3. Requests for
Borrowings. To request a Borrowing, the Borrower shall provide a Term Loan
Borrowing Request to the Administrative Agent not later than 11:00 a.m., New
York City time, two Business Days prior to the date of the proposed Borrowing.
Promptly following receipt of a Term Loan Borrowing Request in accordance with
this Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender’s Term Loan to be made as part of the
requested Borrowing.

     SECTION 2.4. Funding of
Borrowings.

- 16 -




     (a) Each Lender shall make each
Term Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such Term
Loans available to the Borrower by promptly crediting the amounts so received to
the Proceeds Account.

     (b) Unless the Administrative
Agent shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Administrative Agent
such Lender’s share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with
paragraph (a) of this Section and may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. In such event, if a Lender has
not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment to
the Administrative Agent, at (i) in the case of such Lender, the rate determined
by the Administrative Agent in accordance with banking industry rules on
interbank compensation or (ii) in the case of the Borrower, the interest rate
applicable to such Borrowing. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender’s Term Loan
included in such Borrowing.

     SECTION 2.5. Termination and
Reduction of Term Loan Commitments.

     (a) Unless previously terminated,
the Term Loan Commitments shall terminate on the last day of the Availability
Period.

     (b) The Borrower may at any time
terminate, or from time to time reduce, the Term Loan Commitments;
provided that each reduction of the Term Loan Commitments shall be in an
amount that is an integral multiple of $100,000 and not less than
$1,000,000.

     SECTION 2.6. Repayment of Term
Loans. The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of the Term Loan in 15 (fifteen) equal installments on each Principal
Payment Date.

     SECTION 2.7. Evidence of
Debt. 

     (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Term Loan made
by such Lender, including the amounts of principal and interest payable to such
Lender hereunder.

     (b) The Administrative Agent
shall maintain accounts in which it shall record (i) the amount of each Term
Loan made hereunder and the Interest Period applicable thereto, (ii) the amount
of any principal or interest due and payable or to become due and payable from


- 17 -




the Borrower to each Lender hereunder and (iii) the amount of
any sum received by the Administrative Agent hereunder for the account of the
Lenders and each Lender’s share thereof.

     (c) The entries made in the
accounts maintained pursuant to paragraph (a) or (b) of this Section shall be
prima facie evidence of the existence and amounts of the obligations
recorded therein; provided that the failure of any Lender or the
Administrative Agent to maintain such accounts or any error therein shall not in
any manner affect the obligation of the Borrower to repay the Term Loans in
accordance with the terms of this Agreement.

     (d) Any Lender may request that
Term Loans made by it be evidenced by a promissory note. In such event, the
Borrower shall prepare, execute and deliver to such Lender a promissory note
payable to the order of such Lender (or, if requested by such Lender, to such
Lender and its registered assigns) and in a form approved by the Administrative
Agent. Thereafter, the Term Loans evidenced by such promissory note and interest
thereon shall at all times (including after assignment pursuant to Section 10.4)
be represented by one or more promissory notes in such form payable to the order
of the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).

     SECTION 2.8. Optional
Prepayments of Term Loans. The Borrower shall have the right at any time and
from time to time to prepay any Term Loan in whole or in part, provided
that:

     (a) the Borrower shall notify the
Administrative Agent in writing of any prepayment hereunder not later than 11:00
a.m., New York City time, at least five Business Days before the date of
prepayment; each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Term Loan or portion thereof to
be prepaid; promptly following receipt of any such notice, the Administrative
Agent shall advise the Lenders of the contents thereof;

     (b) each prepayment shall be
applied to the Term Loans to be prepaid in inverse order of maturity.
Prepayments shall be accompanied by accrued interest to the extent required by
Section 2.11 and any break funding payments required by Section 2.14.

     (c) the Debt Service Reserve
Account is fully funded;

     (d) the Borrower shall be in
compliance with the financial covenants set forth in Section 6.10 after giving
effect to any such prepayment (calculated on a proforma basis with respect to
the Historical Test Period and Future Test Period for the Test Date most
recently ended); and

     (e) so long as such prepayment is
made with the proceeds of internally generated funds (and not a refinancing)
then no prepayment penalty shall apply; provided that a prepayment
penalty in an amount set forth on the following schedule shall apply with
respect to any prepayment made with proceeds of other than internally generated
funds:

  	Period 	Percentage of Principal Amount
        Prepaid 
	 Closing Date through but excluding the second anniversary
          of the Closing Date 
	3.5% 
	Second anniversary date of the Closing Date to but excluding the third
        anniversary of the Closing Date 	2.5% 
	Third anniversary date of the Closing Date to but excluding the fourth
        anniversary of the Closing Date 	1.5% 
	From and after the fourth anniversary of the Closing Date 	1.0% 


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     SECTION 2.9. Mandatory
Prepayments.

     (a) Excess Cash Flow.
After the termination of the Availability Period, on each date of delivery of
financial statements as required by Sections 5. 1(a) and (b), the Borrower shall
deliver to the Administrative Agent an Excess Cash Flow Certificate for the
fiscal quarter most recently ended and shall simultaneously prepay outstanding
Term Loans in the aggregate principal amount equal to the amount of Excess Cash
Flow as indicated on such certificate, provided that, once the amounts prepaid
by the Borrower in terms of this Section are equal to or in excess of $1,500,000
in the aggregate, the Borrower shall be thereafter obliged to prepay outstanding
Term Loans in the aggregate principal amount equal to 25% of Excess Cash Flow as
indicated on such certificate. The Administrative Agent shall notify the
Borrower, within 10 Business Days after receipt of such certificate, whether it
validates and approves such certificate, and, if it does not validate and
approve the certificate, advise the Borrower of the amount of the Excess Cash
Flow as calculated by the Administrative Agent. In the absence of manifest error
on the part of the Administrative Agent, the Borrower shall adjust the amount to
be paid by it on the following Principal Payment Date by the amount necessary to
take account of the discrepancy in such the certificate, as certified by the
Administrative Agent. Any such prepayment shall be applied in accordance with
clause (e) hereof.

     (b) Dispositions. The
Borrower shall prepay the Term Loans in an amount equal to 100% of the Net Cash
Proceeds of any Disposition or series of Dispositions by any Loan Party or any
Subsidiary of a Loan Party pursuant to Section 6.3(a)(iii) generating Net Cash
Proceeds in excess of $250,000 in the aggregate after the Closing Date. Each
such prepayment shall be due promptly upon receipt by the such Person of such
Net Cash Proceeds and shall be applied as set forth in clause (e) below.
Notwithstanding the foregoing, the Borrower shall not be required to apply any
such proceeds in accordance with clause (e) to the extent that the Borrower
advises the Administrative Agent at the time of the relevant Disposition that
the Borrower intends to use the Net Cash Proceeds thereof to finance one or more
Operating Costs or Project Development Costs permitted by this Agreement, and
such Net Cash Proceeds are in 

- 19 -




fact so applied (or contractually committed to be applied) to
such expenditures within 180 days of such Disposition (it being understood that
Net Cash Proceeds shall be deemed to be utilized in the same order in which they
are received. Any such Net Cash Proceeds which are not applied (or contractually
committed to be applied) within such 180 day period as required by the
immediately preceding sentence shall forthwith be applied in accordance with
clause (e). Notwithstanding the foregoing, the Borrower shall not be required to
prepay any proceeds realized form the sale of any Dispositions generated from
the sale of assets exclusively related to the Coyote Springs or Mimbres sites.
In addition, the Borrower agrees that the sale of any drilling equipment no
longer used in the business of the Borrower shall be considered to be
Disposition under Section 6.3(a)(iii) . 

     (c) Casualty Events. The
Borrower shall prepay the Term Loans in an amount equal to 100% of the Net Cash
Proceeds received by any Loan Party or any Subsidiary of a Loan Party in
connection with any Casualty Event or series of Casualty Events generating Net
Cash Proceeds in excess of $1,000,000 in the aggregate for any fiscal year. Each
such prepayment shall be due promptly upon receipt by such Person of such Net
Cash Proceeds and shall be applied as set forth in clause (e) below.
Notwithstanding the foregoing, the Borrower shall not be required to apply any
such proceeds in accordance with clause (e) to the extent that the Company
advises the Administrative Agent at the time of the relevant Casualty Event that
it intends to use Net Cash Proceeds thereof to finance the replacement or repair
of such affected property, and such Net Cash Proceeds are in fact so applied (or
contractually committed to be applied) to such affected Property within 360 days
of receipt thereof (it being understood that Net Cash Proceeds shall be deemed
to be utilized in the same order in which they are received). Any such Net Cash
Proceeds which are not applied (or contractually committed to be applied) within
such 360 day period as required by the immediately preceding sentence shall
forthwith be applied as set forth in clause (e) below.

     (d) Debt Issuances. The
Borrower shall prepay the Term Loans in an amount equal to 100% of the Net Cash
Proceeds received by the Borrower or any Subsidiary in connection with any Debt
Issuance. Each such prepayment shall be due promptly upon receipt by such Person
of such Net Cash Proceeds and shall be applied as set forth in clause (e)
below.

     (e) Application. Any such
prepayment shall, be applied (i) first, to the Debt Service Reserve Account
until fully funded and (ii) thereafter, pro rata to installments of the Term
Loan in inverse order of maturity until paid in full.

     SECTION 2.10. Fees.

     (a) The Borrower agrees to pay to
the Administrative Agent for the account of each Lender a facility fee, which
shall accrue at 0.250% per annum on the daily amount of the unused Term Loan
Commitment of such Lender during the Availability Period, subject to the last
sentence hereof. Accrued facility fees shall be payable in arrears on the last
day of March, June, September and December of each year and on the date on which
the Term Loan Commitments terminate, commencing on the first such date to occur
after the date hereof. All facility fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). Such fees shall be payable
on an amount of unused commitments for each day equal to the amount of 

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unused Commitments set forth in the table below minus
the amount of Term Loans outstanding on such day: 


  	
        Period 


	
        Amount of 
unused 
Commitments 

	From the Closing Date through the last day of September,
      2007 	$ 3,000,000 
	October 2007 	7,500,000 
	November 2007 	12,500,000 
	December 2007 	16,000,000 
	January 2008 	20,500,000 
	February 2008 	22,000,000 
	March 2008 	23,000,000 
	April 2008 through the end of the Availability Period 	25,000,000




For purposes of illustration, (a) if Term Loans in an amount in
excess of $9,000,000 were outstanding on September 15, 2007, no such fee would
be payable on such day, and (b) if Term Loans in an amount of $2,000,000 were
outstanding on September 15, 2007, such fee would be payable in respect of
$1,000,000 in unused Term Loan Commitments on such day.

     (b) All fees payable hereunder
shall be paid on the dates due, in immediately available funds, to the
Administrative Agent for distribution, in the case of facility fees and
participation fees, to the Lenders. Fees paid shall not be refundable under any
circumstances.

     SECTION 2.11.
Interest.

     (a) The aggregate principal
amount of all outstanding Term Loans shall bear interest from the date such Term
Loan is made until the date the principal of such Term Loan is repaid at an
annual rate equal the LIBOR Rate for the Interest Period in effect for such Term
Loan plus the Applicable Margin.

     (b) Notwithstanding the
foregoing, upon any Event of Default, all principal amounts hereunder shall bear
interest, after as well as before judgment, at a rate per annum equal to 3% plus
the rate otherwise applicable to such Term Loan as provided in the preceding
paragraph of this Section.

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     (c) Accrued interest on each Term
Loan shall be payable in arrears on each Interest Payment Date; provided
that (i) interest accrued pursuant to paragraph (b) of this Section shall be
payable on demand, and (ii) in the event of any prepayment of any Term Loan,
accrued interest on the principal amount prepaid shall be payable on the date of
such prepayment. Notwithstanding the foregoing, for each Interest Payment Date
prior to the first Principal Payment Date, any interest payable with respect to
the Term Loans on such Interest Payment Date shall be capitalized and shall
increase the unpaid principal amount of the Term Loans, provided that any
interest capitalized pursuant to the preceding sentence shall not reduce amounts
available for drawing under Section 2.1.

     (d) The applicable LIBOR Rate
shall be determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.

     SECTION 2.12. Alternate Rate
of Interest. If prior to the commencement of any Interest Period for any
Term Loan:

     (a) the Administrative Agent
determines (which determination shall be conclusive absent manifest error) that
adequate and reasonable means do not exist for ascertaining the LIBOR Rate for
such Interest Period; or

     (b) the Administrative Agent is
advised by the Required Lenders that the LIBOR Rate for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Term Loans (or its Term Loan) included in such
Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the
Borrower and the Lenders by telephone or telecopy as promptly as practicable
thereafter and, until the Administrative Agent notifies the Borrower and the
Lenders that the circumstances giving rise to such notice no longer exist, (i)
no borrowing request shall be effective, and (ii) the Borrower and the Lenders
shall enter into negotiations in good faith with a view to establish a
satisfactory alternative basis for computing interest on the Term Loans.

     SECTION 2.13. Increased
Costs.

     (a) If any Change in Law
shall:

     (i) impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by, any Lender;
or

     (ii) impose on any Lender or the
London interbank market any other condition affecting this Agreement or Term
Loans made by such Lender;

and the result of any of the foregoing shall be to increase the
cost to such Lender of making or maintaining any Term Loan (or of maintaining
its obligation to make Term Loans) or to reduce the amount of any sum received
or receivable by such Lender hereunder (whether of principal, interest or
otherwise), then the Borrower will pay to such Lender, such additional amount or
amounts as will compensate such Lender for such additional costs incurred or
reduction suffered.

- 22 -




     (b) If any Lender determines that
any Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender’s capital or on the capital of such
Lender’s holding company, if any, as a consequence of this Agreement or the Term
Loans made by, such Lender to a level below that which such Lender or such
Lender’s holding company could have achieved but for such Change in Law (taking
into consideration such Lender’s policies and the policies of such Lender’s or
holding company with respect to capital adequacy), then from time to time the
Borrower will pay to such Lender, as the case may be, such additional amount or
amounts as will compensate such Lender or such Lender’s holding company for any
such reduction suffered.

     (c) A certificate of a Lender
setting forth the amount or amounts necessary to compensate such Lender or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender, as the case may be, the
amount shown as due on any such certificate within 10 days after receipt
thereof.

     (d) Failure or delay on the part
of any Lender to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender’s right to demand such compensation;
provided that the Borrower shall not be required to compensate a Lender
pursuant to this Section for any increased costs or reductions incurred more
than 270 days prior to the date that such Lender notifies the Borrower of the
Change in Law giving rise to such increased costs or reductions and of such
Lender’s intention to claim compensation therefor; provided further that,
if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 270-day period referred to above shall be extended to
include the period of retroactive effect thereof.

     SECTION 2.14. Break Funding
Payments. In the event of (a) the payment of any principal of any Term Loan
other than on the last day of an Interest Period applicable thereto (including
as a result of an Event of Default), (b) the failure to borrow any Term Loan on
the date specified in any notice delivered pursuant hereto, then, in each such
event, the Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. Such loss, cost or expense to any Lender shall be
deemed to include an amount determined by such Lender to be the excess, if any,
of (i) the amount of interest which would have accrued on the principal amount
of such Term Loan had such event not occurred, at the LIBOR Rate that would have
been applicable to such Term Loan, for the period from the date of such event to
the last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, for the period that would have been the Interest Period for
such Term Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate on demand.

- 23 -




     SECTION 2.15. Taxes.

     (a) Any and all payments by or on
account of any obligation of the Borrower hereunder shall be made free and clear
of any present and future tax liability and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent or Lender (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.

     (b) In addition, the Borrower
shall pay any Other Taxes to the relevant Governmental Authority in accordance
with applicable law.

     (c) The Borrower shall indemnify
the Administrative Agent and each Lender, within 10 days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent or such Lender, as the case may be, on or with respect
to any payment by or on account of any obligation of the Borrower hereunder
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender or by the
Administrative Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.

     (d) As soon as practicable after
any payment of Indemnified Taxes or Other Taxes by the Borrower to a
Governmental Authority, the Borrower shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.

     (e) Any Foreign Lender that is
entitled to an exemption from or reduction of withholding tax under the law of
the jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall
deliver to the Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.

     (f) If the Administrative Agent
or a Lender determines, in its sole discretion, that it has received a refund of
any Taxes or Other Taxes as to which it has been indemnified by the Borrower or
with respect to which the Borrower has paid additional amounts pursuant to this
Section 2.15, it shall pay over such refund to the Borrower (but only to the
extent of indemnity payments made, or additional amounts paid, by the Borrower
under this Section 2.15 with respect to the Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses 

- 24 -




of the Administrative Agent or such Lender and without interest
(other than any interest paid by the relevant Governmental Authority with
respect to such refund); provided, that the Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent or such Lender in the event
the Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This Section shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Borrower or any other Person.

     SECTION 2.16. Payments
Generally; Pro Rata Treatment; Sharing of Set-offs.

     (a) The Borrower shall make each
payment required to be made by it hereunder (whether of principal, interest or
fees, or of amounts payable under Section 2.13, 2.14 or 2.15, or otherwise)
prior to 12:00 noon, New York City time, on the date when due, in immediately
available funds, without set-off or counterclaim. Any amounts received after
such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made into account
number 2000193000423 maintained by the Administrative Agent with Wachovia Bank,
N.A. located in New York, New York, except that payments pursuant to Sections
2.13, 2.14, 2.15 and 10.3 shall be made directly to the Persons entitled
thereto. The Administrative Agent shall distribute any such payments received by
it for the account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment hereunder shall be due on a day that
is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.

     (b) If at any time insufficient
funds are received by and available to the Administrative Agent to pay fully all
amounts of principal, interest and fees then due hereunder, such funds shall be
applied (i) first, towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (ii) second, towards payment of
principal then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal then due to such parties.

     (c) If any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Term Loans resulting in
such Lender receiving payment of a greater proportion of the aggregate amount of
its Term Loans and accrued interest thereon than the proportion received by any
other Lender, then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Term Loans of other Lenders to
the extent necessary so that the benefit of all such payments shall be shared by
the Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Term Loans; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to 

- 25 -




apply to any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in any
of its Term Loans to any assignee or participant, other than to the Loan Parties
or any Affiliate thereof (as to which the provisions of this paragraph shall
apply). The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.

     (d) Unless the Administrative
Agent shall have received notice from the Borrower prior to the date on which
any payment is due to the Administrative Agent for the account of the Lenders
hereunder that the Borrower will not make such payment, the Administrative Agent
may assume that the Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders,
as the case may be, the amount due. In such event, if the Borrower has not in
fact made such payment, then each of the Lenders severally agrees to repay to
the Administrative Agent forthwith on demand the amount so distributed to such
Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.

     (e) If any Lender shall fail to
make any payment required to be made by it pursuant to Section 2.4(a), 2.16(d)
or 10.3(c) , then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for the account of such Lender to satisfy
such Lender’s obligations under such Sections until all such unsatisfied
obligations are fully paid.

     SECTION 2.17. Mitigation
Obligations. If any Lender requests compensation under Section 2.13, or if
the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Term Loans hereunder or to assign its rights
and obligations hereunder to another of its offices, branches or affiliates, if,
in the judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.13 or 2.15, as the
case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or
assignment.

ARTICLE III. 
REPRESENTATIONS AND
WARRANTIES

     Each Loan Party represents and
warrants to the Lenders that:

     SECTION 3.1. Status and
Power. The Borrower is a corporation duly incorporated and validly existing
under the laws of the State of Delaware. The Guarantor is a corporation duly


- 26 -




incorporated and validly existing under the laws of the State
of Nevada. Each Loan Party is duly qualified, registered or licensed in all
jurisdictions where such qualification, registration or licensing is required
except where the lack of such qualification, registration or licensing could not
reasonably be expected to have a Material Adverse Effect. Each Loan Party has
all requisite corporate capacity, power and authority to own, hold under license
or lease its properties, to carry on its business as now conducted and to
otherwise enter into, and carry out the Transactions. None of the Loan
Parties nor any of their property has any immunity from jurisdiction of any
court or from any legal process (whether through service, notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise).

     SECTION 3.2. Authorization;
Enforceability. All necessary action, corporate or otherwise, has
been taken to authorize the execution, delivery and performance by each Loan
Party of the Loan Documents to which it is a party. Each Loan Party has duly
executed and delivered the Loan Documents to which it is a party. The Loan
Documents to which each Loan Party is a party are legal, valid and binding
obligations of such Loan Party, enforceable against such Loan Party by the other
parties thereto in accordance with their respective terms, except to the extent
that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance and other similar
laws of general application limiting the enforcement of creditors’ rights
generally and the fact that the courts may deny the granting or enforcement of
equitable remedies.

     SECTION 3.3. No
Conflicts. The execution, delivery and performance by each Loan Party
of the Loan Documents and Material Contracts to which it is a party, and the
consummation of the transactions contemplated herein and therein (i) do not
conflict with, result in any breach or violation of, or constitute a default
under the terms, conditions or provisions of (A) the articles of incorporation
or by-laws (or comparable constituting documents) of, or any shareholder
agreement relating to, any Loan Party or (B) any law, regulation, judgment,
decree or order binding on or applicable to any Loan Party or to which its
property is subject or any agreement, lease, license, permit or other instrument
to which any Loan Party is a party or is otherwise bound or by which any Loan
Party benefits or to which any of its property is subject except, in each case,
to the extent that such conflict does not and could not reasonably be expected
to have a Material Adverse Effect and (ii) do not require the consent or
approval of any Governmental Authority or any other Person which has not been
obtained and provided to the Administrative Agent.

     SECTION 3.4. Financial
Statements. The Borrower’s unaudited consolidated financial statements
(consisting of a balance sheet, statement of operations, statement of changes in
shareholder’s deficit, and statement of cash flows) for the quarter ended March
31, 2007, were prepared in accordance with GAAP consistently applied (except
that certain information and footnote disclosures normally included in financial
statements prepared in accordance with GAAP have been omitted or condensed and
subject to normal and recurring year-end adjustments which will not be
individually or in the aggregate material) in accordance with past practice and
no Material Adverse Change has occurred since such date. Such financial
statements fairly present the financial condition of the Borrower as at the date
thereof and the financial statements fairly present the results of operations,
cash flow and income of the Borrower during the fiscal period covered
thereby.

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     SECTION 3.5. Intentionally
Omitted.

     SECTION 3.6. Litigation,
etc. Except as described in Section 3.6 of the Disclosure Schedule,
there are no actions, suits, investigations, claims or proceedings which have
been commenced or, to the knowledge of any Loan Party, have been threatened in
writing against or affecting any Loan Party before any Governmental Authority
which contest any of the transactions contemplated in any of the Loan Documents
or Material Contracts. There are no actions, suits, investigations, claims or
proceedings which have been commenced or, to the knowledge of any Loan Party,
have been threatened in writing against or affecting any Loan Party before any
Governmental Authority which could reasonably be expected to have a Material
Adverse Effect.

     SECTION 3.7. Title to
Assets. Except as described in Section 3.7 of the Disclosure Schedule, each
Loan Party has a good and marketable title to all of its property and assets
which constitute Collateral, free from any Liens other than the Permitted Liens,
and no Person has any agreement or right to acquire any of the Collateral except
as permitted hereunder.

     SECTION 3.8. Conduct of
Business. No Loan Party is in violation of any mortgage, franchise,
license, certificate of approval, permit, judgment, decree, order, statute, rule
or regulation relating in any way to itself or to the operation of its business
or to its property or assets in a manner which could reasonably be expected to
have a Material Adverse Effect. Except as set forth in Section 3.8 of the
Disclosure Schedule, each Loan Party has all licenses, certificates of approval,
permits, registrations, approvals and consents which are required to own its
properties and assets and to operate its businesses where they are currently
being operated, other than any such items the absence of which could not
reasonably be expected to have a Material Adverse Effect.

     SECTION 3.9. Labor and
Employment Matters. Except as described in Section 3.9 of the Disclosure
Schedule, there are no material employment agreements covering management of the
Borrower and there are no collective bargaining agreements or other labor
agreements covering any employees of the Borrower. Hours worked by and payment
made to employees of the Borrower have not been in violation of any Applicable
Law dealing with such matters. All payments due and payable from the Borrower on
account of employee health and welfare insurance have been paid or accrued as a
liability on the books of the Borrower.

     SECTION 3.10. No Default.
No Default or Event of Default exists or would result from the incurring by any
Loan Party of its respective Obligations. No Loan Party is in default under or
with respect to any Material Contract or any other contractual obligation in any
respect which, individually or together with all such defaults, could reasonably
be expected to have a Material Adverse Effect.

     SECTION 3.11. Tax Returns and
Taxes. Except as described in Section 3.11 of the Disclosure
Schedule, each Loan Party has filed all tax returns and tax reports required by
law to have been filed by it and has paid all taxes and governmental charges
thereby shown to be owing, except any such taxes or charges which are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books.

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     SECTION 3.12. Withholding and
Other Taxes. Assuming the Loans are funded by bank branches in London or the
United States, no income, stamp or other taxes or levies, imposts, deductions,
fees, duties, compulsory loans, withholdings or other charges of any nature
whatsoever are or will be, under Applicable Law as in effect on the date hereof,
imposed, assessed, levied or collected by the United States or any political
subdivision or taxing authority thereof or therein on or in respect of
principal, interest or fees payable to the Lenders or the Administrative Agent
hereunder or under any other Loan Document, except, as of the date hereof, tax
payable on net income under the laws of the United States or any State thereof.
To the extent this representation is repeated or deemed repeated pursuant to
this Agreement or other Loan Documents, this representation shall continue to be
true and correct if the Borrower discloses in writing to the Administrative
Agent any change as to this representation. 

     SECTION 3.13. Material
Contracts. The copies of each Material Contract and of any amendments
thereto provided or to be provided by the Loan Parties to the Administrative
Agent are, or when delivered will be, true and complete copies of such
agreements and documents and no consent or other further action is required for
the effectiveness and enforceability of any of such agreements heretofore
provided and each such agreement is, or when executed and delivered will be, in
full force and effect and enforceable by the relevant Loan Party, except to the
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance and other similar
laws of general application limiting the enforcement of creditors’ rights
generally and the fact that the courts may deny the granting or enforcement of
equitable remedies.

     SECTION 3.14. Compliance with
Environmental Laws. Except as described in Section 3.14 of the Disclosure
Schedule, as of the date hereof, the operations and properties of the Borrower
are in compliance with applicable Environmental Laws, except where (i)
appropriate remedial action acceptable to the Borrower and the applicable
Governmental Authority is (or is in the process of) being taken or (ii) failure
to so comply, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect. The Borrower has designed the Project in
compliance in all material respects with applicable Environmental Laws and the
Administrative Agent and the Lenders are fully indemnified by the Loan Parties
against any future liabilities arising under any applicable Environmental
Laws.

     SECTION 3.15. Solvency.
After giving effect to the transactions contemplated by this agreement and the
other Loan Documents (including the receipt of equity proceeds as contemplated
by Section 4.1(m)), and before and after giving effect to each Term Loan, each
Loan Party is, and the Loan Parties on a consolidated basis are, Solvent.

     SECTION 3.16. Locations of
Tangible Assets. The addresses of all locations of the inventory,
equipment and other tangible assets of the Borrower comprising part of the
Collateral (other than inventory in transit) are as set out in Section 3.16 of
the Disclosure Schedule. With respect to inventory located at a public
warehouse, the Borrower has not issued a negotiable document of title with
respect thereto.

     SECTION 3.17. Consents and
Approvals for the Project. Except as set forth in Section 3.17 of the
Disclosure Schedule, all Approvals and all concessions, mining rights, water
rights, easements, mining and civil usufructs, surface rights, rights of way,
property rights and other 

- 29 -




consents between the Borrower and third parties necessary for
the development, construction and operation of the Project and all licenses or
other rights to use technology have been obtained, are in full force and effect
and are sufficient to permit (A) the development and construction of the Project
in all material respects as contemplated by the Construction Schedule and
Capital Spending Plan and the Feasibility Study, (B) the operation of the
Project in all material respects as contemplated by the Feasibility Study and
(C) the execution, delivery and performance by any Loan Party of its obligations
under the Material Contracts, in each case other than those which (x) are not
now necessary and which are expected to be obtained in the ordinary course of
business by the time they are necessary or (y) the failure to have or to obtain
will not now and could not reasonably be expected to have a Material Adverse
Effect.

     SECTION 3.18. Consents and
Approvals for the Security. No consents, approvals, acknowledgements,
undertakings, non-disturbance agreements, directions or other documents or
instruments which have not already been provided to the Administrative Agent are
required to be entered into by any Person (i) to make effective the Security
created or intended to be created by the Loan Parties in favor of the
Administrative Agent pursuant to the Security Documents, (ii) to ensure the
perfection and the intended priority of such Security other than financing
statements and other registrations made in connection with such Security or
(iii) to implement the transactions contemplated by the Loan Documents.

     SECTION 3.19. Intentionally
Omitted.

     SECTION 3.20.
Subsidiaries. The Borrower has no Subsidiaries, other than Cochise.

     SECTION 3.21. Mining
Properties. The Mining Properties have been validly granted to and
registered in the name of the Borrower, are owned by the Borrower and are in
full force and effect and in good standing. Except as set forth in Section 3.7
of the Disclosure Schedule, no Person other than the Borrower and, to the extent
provided in the Security Documents, the Administrative Agent, has any right,
title or interest in, to or under the Mining Properties or in the property and
rights encompassed thereby other than Permitted Liens. Taken as a whole, the
Mining Properties are sufficient in duration, scope, content and effect to
permit the Borrower to conduct all activities contemplated in the Feasibility
Study to be conducted by it over the time periods specified therein.

     SECTION 3.22. Feasibility
Study. As of the date hereof, the Feasibility Study (as augmented by the
Construction Schedule and Capital Spending Plan and the Financial Model) does
not, taken as a whole, include any untrue statement of a material fact or omit a
material fact necessary to make the information therein not misleading. As of
the date hereof, the Borrower believes that, taken as a whole, except for the
assumptions relating to metal prices to the extent such prices are not hedged,
interest rates, exchange rates and the rate of inflation (which assumptions
reflect solely a choice of a reasonable manner of calculation and presentation),
(i) the Feasibility Study (as augmented by the Construction Schedule and Capital
Spending Plan and Financial Model), taken as a whole, is fair and reasonable in
light of the Borrower’s expectations as of the date hereof with respect to the
Project, (ii) the assessment of reserves of the Project contained in the
Feasibility Study (as augmented by the Construction Schedule and Capital
Spending Plan and Financial Model) is fair and reasonable, and (iii) the cash
flow calculations contained in the Feasibility Study (as augmented by the
Construction Schedule and 

- 30 -




Capital Spending Plan and Financial Model) are based on
assumptions which, at the date hereof, are fair and reasonable in light of the
Borrower’s expectations with respect to the Project.

     SECTION 3.23. Financial Model,
Construction Schedule and Capital Spending Plan. The Borrower believes that,
except for the assumptions relating to metal prices to the extent such prices
are not hedged, interest rates, exchange rates and the rate of inflation (which
assumptions reflect solely a choice of a reasonable manner of calculation and
presentation), (i) the Construction Schedule and Capital Spending Plan, and the
Financial Model, taken as a whole, are fair and reasonable in light of the
Borrower’s expectations and information as of the date hereof with respect to
the Project and (ii) taken as a whole, the cash flow calculations contained in
the Financial Model are based on assumptions which, at the date hereof, are fair
and reasonable in light of the Borrower’s expectations and information with
respect to the Project.

     SECTION 3.24. Project
Information. Except as otherwise expressly provided herein, the information
provided by or on behalf of the Loan Parties in writing to the Administrative
Agent (except to the extent such information relates to Persons other than the
Loan Parties) but excluding metal prices to the extent such prices are not
hedged, interest rates, exchange rates and the rate of inflation (which
assumptions reflect solely a choice of a reasonable manner of calculation and
presentation), taken as a whole, does not contain any untrue statement of
material fact (or omit any material fact or circumstance necessary in order to
make the information contained therein not misleading) known to the Borrower at
the time of execution of this Agreement.

     SECTION 3.25. Intellectual
Property. The Borrower owns or is licensed or otherwise has the right to use
all Intellectual Property that is used in the operation of its business without
conflict with the rights of any other Person (other than any Intellectual
Property the absence of which or any such conflict with respect to which could
not reasonably be expected to have a Material Adverse Effect). The Borrower has
not received any notice of any claim of infringement or similar claim or
proceeding relating to any of the Intellectual Property which if determined
against the Borrower could reasonably be expected to have a Material Adverse
Effect.

     SECTION 3.26. Liens.
Subject to the requisite registrations of the Security Documents or filings
thereof, the Liens granted to the Administrative Agent pursuant to the Security
Documents are fully perfected first priority Liens in and to the Collateral,
subject only to Permitted Liens.

     SECTION 3.27. Insurance.
All insurance required to be maintained pursuant to Section 5.5 is in full
force and effect.

     SECTION 3.28. Ranking. The
Term Loans shall rank at least pari passu with all other unsecured
indebtedness of the Loan Parties, except for those which are preferred by
provisions of applicable statutory law. 

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ARTICLE IV. 
CONDITIONS

     SECTION 4.1. Closing Date.
The obligations of the Lenders to make Term Loans hereunder shall not become
effective until the second Business Day after the date on which each of the
following conditions is satisfied in a manner satisfactory to the Administrative
Agent (or waived in accordance with Section 10.2):

     (a) The Administrative Agent
shall have received executed versions of each of the Loan Documents from each of
the parties thereto, including the Borrower.

     (b) Each of the Material
Contracts set forth on clause (A) of Schedule 1.1 shall be in form and substance
reasonably satisfactory to the Administrative Agent and shall have been executed
by each of the parties thereto and delivered to the Administrative Agent. Each
of the Consent Agreements shall be in form and substance satisfactory to the
Administrative Agent and shall have been executed by each of the parties thereto
and delivered to the Administrative Agent.

     (c) The Administrative Agent and
the Borrower shall have agreed on (i) the Initial Financial Model, the
Construction Schedule and Capital Spending Plan, and the Environmental Plan and
(ii) the operating budgets (which shall include an operating budget for contract
mining or lease payments for mining equipment), copies of which shall have been
delivered to the Administrative Agent (it being understood that the initial
budgets shall be included as part of the Initial Financial Model).

     (d) Evidence that the Existing
Bridge Loan Facility has been repaid in full and all Liens securing the
obligations thereunder have been released.

     (e) Evidence that the Forward
Sale Price Protection Program has been implemented.

     (f) The Independent Technical
Consultant shall have been appointed.

     (g) The Administrative Agent and
the Borrower shall have agreed on the forms of Completion Certificates and the
tests for Completion for purposes thereof.

     (h) The Administrative Agent
shall have received a favorable written opinion (addressed to the Administrative
Agent and the Lenders and dated the Closing Date) of (i) Ballard Spahr Andrews
& Ingersoll LLP, Arizona counsel for the Borrower, and (ii) Bingham
McCutchen LLP, New York counsel to the Administrative Agent, covering such
matters relating to the Loan Parties, this Agreement or the Transactions as the
Administrative Agent shall reasonably request.

     (i) The Administrative Agent
shall have received such documents and certificates as the Administrative Agent
or its counsel may reasonably request relating to the organization, existence
and good standing of the Loan Parties, the authorization of the Transactions and
any other legal matters relating to the Borrower and the Guarantor, this 

- 32 -




Agreement or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel, including, but not
limited to:

     (i) a
copy of the certificate of incorporation and by-laws or other founding
documentation of each of the Borrower and the Guarantor;

     (ii) a
copy of the resolutions of the board of directors or other appropriate decision
making body of each of the Borrower and the Guarantor authorizing the conclusion
and execution of each of the Loan Documents; and

     (iii)
specimen signatures of each of the authorized officers of the Borrower for the
purposes of implementation of the Loan Documents.

     (j) The Administrative Agent
shall have received:

     (i)
evidence that all insurance required to be maintained pursuant to the Loan
Documents has been obtained and is in effect, together with evidence that the
Administrative Agent has been named as “additional insured” and “loss payee”
under each policy of insurance;

     (ii)
evidence that the Borrower has obtained all Approvals necessary to commence
implementation of the Construction Schedule and Capital Spending Plan;

     (iii) to
the extent relevant, searches of Uniform Commercial Code or other similar
records or filings in the jurisdiction of formation of the Borrower, the
jurisdiction of the chief executive office of the Borrower and each jurisdiction
where any Collateral is located or where a filing would need to be made in order
to perfect the Administrative Agent’s security interest in the Collateral,
copies of the financing statements on file in such jurisdictions and evidence
that no Liens exist other than Liens permitted by Section 6.2;

     (iv) all
certificates evidencing all certificated equity interests pledged to the
Administrative Agent pursuant to the Security Documents, together with duly
executed in blank, undated stock powers attached thereto;

     (v) in
the case of any real property Collateral, a title insurance policy together with
proof of payment of all fees and premiums for such policy, from the applicable
title insurance Loan Party and in amounts satisfactory to the Administrative
Agent, insuring the interest of the Administrative Agent as mortgagee;

     (vi) all
applicable “Know Your Customer” client identification documentation;

     (vii) in
the case of any personal property Collateral located at a premises leased the
Borrower, such estoppel letters, consents and waivers from the landlords on such
real property as may be required by the Administrative Agent; and

- 33 -




     (viii)
the Collateral Accounts shall have been established with a bank acceptable to
the Administrative Agent and the Collateral Account Agreement shall have been
executed by such bank and the Lenders, the Administrative Agent and the Borrower
and delivered to the Administrative Agent.

     (k) The Lenders shall have
completed a due diligence investigation of the Project, the Borrower and its
subsidiaries in scope, and with results, satisfactory to the Lenders, and shall
have been given such access to the management records, books of account,
contract and properties of Borrower and its subsidiaries and shall have received
such financial, business and other information regarding the Project and each of
the foregoing Persons and their businesses as they shall have reasonably
requested.

     (l) The Administrative Agent
shall have received certification that there does not exist (a) any order,
decree, judgment, ruling or injunction which restrains the consummation of the
Loan Documents in the manner contemplated hereby, and (b) any pending or
threatened action, suit, investigation or proceeding which is reasonably likely
to be adversely determined and, if adversely determined, could reasonably be
expected to have a Material Adverse Effect.

     (m) The Borrower shall have
received additional equity proceeds in an amount not less than $23,000,000 on
terms acceptable to the Administrative Agent.

     (n) The Administrative Agent
shall have received a certificate, dated the Closing Date and signed by a
Financial Officer, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.2.

     (o) The Administrative Agent
shall have received all fees, costs and expenses and other amounts due and
payable on or prior to the Closing Date in connection with the Transaction,
including, to the extent invoiced, reimbursement or payment of all out-of-pocket
expenses required to be reimbursed or paid by the Borrower hereunder.

The Administrative Agent shall notify the Borrower and the
Lenders of the Closing Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Term Loans
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 10.2) at or prior to 3:00 p.m., New
York City time, on September 30, 2007 (and, in the event such conditions are not
so satisfied or waived, the Term Loan Commitments shall terminate at such
time).

     SECTION 4.2. Additional
Conditions. The obligation of each Lender to make a Term Loan on the
occasion of any Borrowing is subject to the satisfaction of the following
conditions:

     (a) The representations and
warranties of the Borrower set forth in this Agreement shall be true and correct
on and as of the date of such Borrowing.

     (b) At the time of and
immediately after giving effect to such Borrowing no Default shall have occurred
and be continuing.

Each Borrowing shall be deemed to constitute a representation
and warranty by the Borrower on the date thereof as to the matters specified in
paragraphs (a) and (b) of this Section.

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ARTICLE V. 
AFFIRMATIVE COVENANTS

     Until the Term Loan Commitments
have expired or been terminated and the principal of and interest on each Term
Loan and all fees payable hereunder shall have been paid in full, the Loan
Parties covenant and agree with the Lenders that:

     SECTION 5.1. Financial
Statements and Reporting. The Borrower, will furnish the Administrative
Agent and each Lender with the following documents, statements and reports (by
email and in pdf format):

     (a) Annual Financial
Statements. Within 90 days after the end of each fiscal year of the
Borrower, its audited consolidated balance sheet and related statements of
operations, stockholders’ equity and cash flows as of the end of and for such
year, setting forth, in the case of statements of operations and cash flows, in
comparative form the figures for the previous fiscal year, all reported on by
Mayer Hoffman McCann P.C. or other independent public accountants of recognized
national standing to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated subsidiaries in accordance with
GAAP consistently applied.

     (b) Quarterly and Semi-Annual
Financial Statements. For the first 3 years after the Closing Date, 45 days
after the end of each of the first three fiscal quarters of each fiscal year of
the Borrower, and after such 3 year period, within 45 days after the end of each
fiscal half year, the Borrower shall deliver its consolidated balance sheet and
related statements of operations, stockholders’ equity and cash flows as of the
end of and for such fiscal quarter or half year, as applicable and the then
elapsed portion of the fiscal year, setting forth, in the case of statements of
operations and cash flows, in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of)
the previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and results
of operations of the Borrower and its consolidated subsidiaries in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes.

     (c) Quarterly Financial
Projections. As soon as available, but in any event at least 30 days prior
to the close of each fiscal quarter of the Borrower, a quarterly projection with
respect to the operations of the Borrower for the next four fiscal quarters.
Such projections shall be certified by the Financial Officer of the Borrower to
the effect that such projections have been prepared on the basis of sound
financial planning practice and that such Financial Officer has no reason to
believe that they are misleading in any material respect based upon the
knowledge and information available at the time of creation, update, and/or
certification.

     (d) Certificate of
Compliance. Concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the Borrower
(i) certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Section 6.10 and (iii) stating whether any change
in GAAP or in the application thereof has occurred since the date of the 

- 35 -




audited financial statements referred to in Section 3.4 and, if
any such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate.

     (e) Certificate of Accounting
Firm. Concurrently with any delivery of financial statements under clause
(a) above, a certificate of the accounting firm that reported on such financial
statements stating whether they obtained knowledge during the course of their
examination of such financial statements of any Default (which certificate may
be limited to the extent required by accounting rules or guidelines).

     (f) Construction Progress
Reports. As soon as available, but in no event more than 20 days after the
end of each calendar month prior to Completion, a summary of construction of the
Project during such month in a form agreed to by the Borrower and the
Administrative Agent, describing (i) physical progress and expenditure during
such month, (ii) cumulative expenditure through the end of such month, (iii)
variations of such progress and expenditure from that set forth in the
Construction Schedule and Capital Spending Plan, (iv) the Borrower’s then
current estimates of total Project Development Costs and of the date of Start-up
of Commercial Production and the Completion Date and (v) any fact or occurrence
of which the Borrower is aware that (x) may reasonably be expected to increase
the aggregate Project Development Costs above those in the Construction Schedule
and Capital Spending Plan, delay Start-up of Commercial Production or the
Completion Date beyond the then-currently estimated dates therefor or have a
Material Adverse Effect on the performance of the Project when completed or (y)
may reasonably be expected to render unreasonable or inappropriate any material
assumption on which the Financial Model or the Construction Schedule and Capital
Spending Plan was based, and the anticipated manner and timing of actions
proposed to be taken by the Borrower in reaction to any such fact or
occurrence.

     (g) Operating Reports. As
soon as available but in no event more than 20 days after the end of each fiscal
quarter after the earlier of the date of Completion or Start-up of Commercial
Production, a summary of such month’s or such fiscal quarter’s operations and a
summary of the fiscal year-to-date operations in a form agreed to by the
Borrower and the Administrative Agent, in each case compared to the budgets and
forecasts delivered pursuant to clause (h) above, including information in
reasonable detail concerning (i) Project production and shipment of Project
production during such period and variations from the related projections for
such period reflected in the Financial Model, (ii) the Borrower’s inventory of
product at the end of such period, (iii) revenues generated during such period
from the sale of product, (iv) Operating Costs during such period as compared to
the Financial Model, (v) costs constituting Capital Expenditures during such
period as compared to the Construction Schedule and Capital Spending Plan, (vi)
the Borrower’s most recent cash planning forecast covering at least the next
following month or fiscal quarter, as the case may be, and (vii) any material
developments during such period in Project operation, including material
technical problems, discovery of any material defects in the physical facilities
of the Project, material interruptions to operation or material labor
difficulties.

     (h) Budget. As soon as
available, but in any event at least 30 days prior to the close of each fiscal
year of the Borrower, the Borrower’s budget and operating plan for the following
fiscal year, such budget to be in a form reasonably satisfactory to the
Administrative Agent.

- 36 -




     (i) Environmental
Compliance. Any material update of the Environmental Plan within 30 days
after such update is available. The Borrower shall promptly, but in no event
later than 5 Business Days after the Borrower obtains knowledge thereof, deliver
written notice to the Administrative Agent (for delivery to each Lender) of the
occurrence of (i) any material environmental accident or spill affecting the
Borrower or the Project, (ii) any other condition, event or circumstance that
results in non-compliance by the Borrower or the Project with any applicable
Environmental Law in any material respect and (iii) any other material
condition, event or circumstance which is listed as a reportable event under the
Environmental Plan then in effect. In addition, the Borrower shall, upon the
request of the Administrative Agent, but in any event no more frequently than
annually (unless an Event of Default shall have occurred and be continuing)
provide a report to the Administrative Agent with regard to the Borrower’s
compliance with applicable Environmental Laws in a form as reasonably agreed
between the Borrower and the Administrative Agent.

     (j) Insurance
Certification. As soon as available, but in no event more than 30 days after
the end of each fiscal year of the Borrower, a certification by the Borrower’s
insurance broker confirming insurance coverage and payment of premiums. 

     (k) Other Information.
Promptly following any request therefor, such other information regarding the
operations, business affairs and financial condition of the Borrower, or
compliance with the terms of this Agreement, as the Administrative Agent or any
Lender may reasonably request.

Any delivery required to be delivered by clauses (a) and (b) of
this Section by the Borrower shall be deemed to be delivered to the
Administrative Agent and the Lender upon the filing of such items with the
Securities and Exchange Commission or other applicable securities commission,
provided that such items are readily available for public viewing. 

     SECTION 5.2. Notices of
Material Events. The Borrower will furnish to the Administrative Agent and
each Lender prompt written notice of the following:

     (a) the occurrence of any
Default;

     (b) the filing or commencement of
any action, suit or proceeding by or before any arbitrator or Governmental
Authority against or affecting the Borrower or any Affiliate thereof that, if
adversely determined, could reasonably be expected to result in a Material
Adverse Effect;

     (c) the occurrence of any ERISA
Event that, alone or together with any other ERISA Events that have occurred,
could reasonably be expected to result in liability of the Borrower and its
Subsidiaries in an aggregate amount exceeding $250,000; and

     (d) any other development that
results in, or could reasonably be expected to result in, a Material Adverse
Effect.

Each notice delivered under this Section shall be accompanied
by a statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or 

- 37 -




development requiring such notice and any action taken or
proposed to be taken with respect thereto.

     SECTION 5.3. Existence;
Conduct of Business. The Borrower will do or cause to be done all things
reasonably necessary to preserve, renew and keep in full force and effect its
legal existence and the rights, licenses, permits, privileges and franchises
material to the conduct of its business.

     SECTION 5.4. Payment of
Obligations. Each Loan Party shall pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
such Loan Party has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse
Effect.

     SECTION 5.5. Maintenance of
Properties; Insurance. Each Loan Party will (a) keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations.

     SECTION 5.6. Books and
Records; Inspection Rights. Each Loan Party will keep proper books of record
and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. Each Loan Party will
permit any representatives designated by the Administrative Agent or any Lender,
upon reasonable prior notice, to visit and inspect its properties, to examine
and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and independent accountants, all at
such reasonable times and as often as reasonably requested.

     SECTION 5.7. Compliance with
Laws. Each Loan Party will comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

     SECTION 5.8. Use of
Proceeds. The proceeds of the Term Loans will be used only for the purposes
of (a) repayment of Existing Bridge Loan Facility (to the extent remaining
unpaid) and (b) costs and expenses in connection with redevelopment of the
Project. No part of the proceeds of the Term Loans will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board of Governors of the Federal Reserve System, including
Regulations T, U and X.

     SECTION 5.9. Project;
Construction; Etc.

     (a) The Borrower shall not change
in any material respect the purpose or scope of the Project from that set forth
in the Feasibility Study (as augmented by the Construction Schedule and Capital
Spending Plan) unless approved in writing by the Required 

- 38 -




Lenders. The physical facilities to be constructed and owned by
the Borrower shall be substantially the same as those described in the
Feasibility Study (as augmented by the Construction Schedule and Capital
Spending Plan) and shall be constructed pursuant to and substantially in
accordance with the Construction Schedule and Capital Spending Plan.

     (b) The Borrower shall enforce
against the other parties to the Material Contracts any rights (including
warranty rights) under the Material Contracts, except to the extent
non-enforcement thereof could not reasonably be expected to have a Material
Adverse Effect.

     SECTION 5.10. Updated
Financial Model.

     (a) On or prior to the date of
delivery of financial statements provided for in Sections 5.1(a) and (b), the
Borrower shall deliver to the Administrative Agent an updated Financial Model.
Each updated Financial Model shall (i) be in substantially the form of, and
contain the same type of data, projections, forecasts, calculations, assumptions
and other information as, the Financial Model delivered on the Closing Date (the
“Initial Financial Model”), but shall be updated to include actual
financial results and other current financial information (including with
respect to the price for unhedged copper production) and (ii) provide an
explanation of any deviation in the amount attributed to any line item specified
in such Financial Model where such deviation is 10% or more of the amount
attributed to the same line item in the Initial Financial Model unless such
deviation has been explained and incorporated into a prior Financial Model; and
(iii) include such other information as the Administrative Agent may reasonably
request.

     (b) The Administrative Agent
shall have 10 days from the date of receipt of an updated Financial Model to
accept or reject such updated Financial Model. In the event that the
Administrative Agent accepts such updated Financial Model, it shall become the
current Financial Model. The Administrative Agent shall promptly review such
updated Financial Model, and if the Administrative Agent does not accept such
updated Financial Model, it shall promptly notify the Borrower thereof, the
Borrower shall, within 10 Business Days and after consultation with the
Administrative Agent as to the reasons therefor, submit an appropriately revised
Financial Model. Following such resubmission, the process shall be repeated
until the Financial Model has been accepted by the Administrative Agent. To the
extent that a fiscal quarter commences without a Financial Model having been
approved in accordance with this Section 5.10, the previously approved Financial
Model shall remain in effect until a revised Financial Model shall have been
approved.

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     SECTION 5.11. Further
Assurances. Each Loan Party will, and will cause each of its Subsidiaries
to, cooperate with the Lenders and the Administrative Agent and execute such
further instruments and documents as the Lenders or the Administrative Agent
shall reasonably request to carry out to their satisfaction the transactions
contemplated by this Agreement and the other Loan Documents. If the Borrower
enters into any Material Contract after the Closing Date, it shall provide a
Consent Agreement to such Material Contract in a form reasonably acceptable to
the Administrative Agent (if such Material Contract has a value in excess of
$1,000,000, as determined by the Administrative Agent in consultation with the
Borrower).

ARTICLE VI. 
NEGATIVE COVENANTS

     Until the Term Loan Commitments
have expired or terminated and the principal of and interest on each Term Loan
and all fees payable hereunder have been paid in full, the Borrower covenants
and agrees with the Lenders that:

     SECTION 6.1. Indebtedness.
The Loan Parties will not create, incur, assume or permit to exist any
Indebtedness, except 

     (a) Indebtedness created
hereunder; 

     (b) Indebtedness in respect of
capital leases and purchase money obligations for fixed or Capital Assets within
the limitations set forth in Section 6.2(d); provided, that the aggregate
amount of all such Indebtedness at any one time outstanding shall not exceed
$250,000; and

     (c) Indebtedness in respect of
letters of credit issued in connection with obligations arising under Material
Contracts or other vendor accounts payable in the ordinary course of business.


     SECTION 6.2. Liens. The
Loan Parties will not create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except 

     (a) Permitted Liens; 

     (b) Liens as of the Closing Date
and set forth on Schedule 6.2 (provided that the aggregate amount of
Indebtedness or other obligations secured by such Liens does not exceed
$1,000,000); 

     (c) the interest of a vendor or a
lessor under any conditional sale agreement, capital lease or title retention
agreement (or any financing lease having substantially the same economic effect
as any of the foregoing); and

     (d) Liens securing Indebtedness
permitted under Section 6.1(b); provided that (i) such Liens do not at
any time encumber any property other than the property financed by such
Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost
or fair market value, whichever is lower, of the property being acquired on the
date of acquisition.

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     SECTION 6.3. Fundamental
Changes; Dispositions; Subsidiaries; Etc.

     (a) The Borrower will not merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or liquidate or dissolve, or make any Disposition,
provided that the Borrower may make Dispositions 

     (i) of
obsolete or worn out property, whether now owned or hereafter acquired, in the
ordinary course of business, 

     (ii) of
inventory in the ordinary course of business, and 

     (iii) of
Property which results in an aggregate amount of proceeds not to exceed $250,000
from and after the Closing Date, provided that the Net Cash Proceeds of
any such Dispositions pursuant to this clause (iii) are applied in accordance
with Section 2.9(b) .

     (b) The Borrower will not engage
in any business or exploration other than the development of the Project or, in
accordance with the terms of this Agreement, the Coyote Springs or Mimbres
sites.

     SECTION 6.4. Investments,
Loans, Advances, Guarantees and Acquisitions. The Borrower will not
purchase, hold or acquire any Equity Interest, evidences of indebtedness or
other securities (including any option, warrant or other right to acquire any of
the foregoing) of, make or permit to exist any loans or advances to, guarantee
any obligations of, or make or permit to exist any investment or any other
interest in, any other Person (other than Cochise), or purchase or otherwise
acquire any assets of any other Person constituting a business unit, except (a)
Permitted Investments, (b) investments in Coyote Springs and the Mimbres sites,
in accordance with the terms of this Agreement, (c) and other investment in an
amount not to exceed $20,000.

     SECTION 6.5. Hedging
Agreements. The Loan Parties will not enter into any Hedging Agreement with
respect to copper, except the Forward Sale Price Protection Program.

     SECTION 6.6. Restricted
Payments. The Borrower will not declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment except that 

     (a) the Borrower may make
Restricted Payments so long as (i) Completion shall have occurred, (ii)
immediately after making such payment, the Debt Service Coverage Ratio for any
Historical Test Period or Future Test Period shall not be less than 1.8:1.00,
(iii) the Debt Service Reserve Account is fully funded, (iv) the Borrower shall
be in compliance with all financial covenants on a proforma basis after giving
effect to such Restricted Payment or expenditure (calculated on a proforma basis
with respect to the Historical Test Period most recently ended and Future Test
Period from such date), and (v) no Default or Event of Default exist or shall
occur after giving effect to such Restricted Payment; 

     (b) the Borrower may make
Restricted Payments relating to exploration expenditures at the Mimbres and
Coyote Springs sites, so long as (i) Completion shall have occurred, (ii)
immediately after making such payment, the Debt Service Coverage Ratio for any


- 41 -








Historical Test Period or Future Test Period shall not be less
than 1.3:1.00, (iii) the Debt Service Reserve Account is fully funded, (iv) the
Borrower shall be in compliance with all financial covenants on a proforma basis
after giving effect to such Restricted Payment or expenditure (calculated on a
proforma basis with respect to the Historical Test Period most recently ended
and Future Test Period from such date), (v) no Default or Event of Default exist
or shall occur after giving effect to such Restricted Payment, (vi) the maximum
amount of all such expenditures made pursuant to this clause (b) relating to the
Mimbres site shall not exceed $2,750,000, and (vii) the maximum amount of all
such expenditures relating to the Coyote Springs site made pursuant to this
clause (b) shall not exceed $2,100,000 in the aggregate; and 

     (c) the Borrower may make
Restricted Payments constituting “Liquidity Incentive Payments” in connection
with and as defined under the $23 million equity financing documentation as such
documentation is in effect on the date hereof, provided that such amounts do not
exceed $2,760,000 in the aggregate.

     SECTION 6.7. Transactions with
Affiliates. The Borrower will not sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to the Borrower than could be obtained on an
arm’s-length basis from unrelated third parties, and (b) any Restricted Payment
permitted by Section 6.6.

     SECTION 6.8. Restrictive
Agreements. The Borrower will not enter into, incur or permit to exist any
agreement or other arrangement that prohibits, restricts or imposes any
condition upon the ability of the Borrower to create, incur or permit to exist
any Lien upon any of its property or assets; provided that the foregoing
shall not apply to restrictions and conditions imposed by law or by this
Agreement.

     SECTION 6.9. Material
Contracts. The Borrower shall not amend, modify or waive any material
provision of any Material Contract in any way adverse to the Lenders.

     SECTION 6.10. Financial
Covenants.

     (a) Starting with the last day of
the first full fiscal quarter after Completion, the Borrower will not permit the
Debt Service Coverage Ratio for any Historical Test Period or any Future Test
Period to be less than 1.5 to 1.00.

     (b) Starting with the last day of
the first full fiscal quarter after Completion, the Borrower will not permit the
Interest Coverage Ratio for any Historical Test Period or any Future Test Period
to be less than 2.0 to 1.00.

     (c) The Borrower will not permit
the ratio of (i) Indebtedness of the type described in clauses (a), (b), and (c)
of the definition thereof, to (ii) Shareholders Equity to exceed 1.3 to 1.00 at
any time. For purposes of this clause (c), “Shareholders Equity” means, as of
the date of determination, all items which would be included under “shareholders
equity” on a consolidated balance sheet of the Borrower and its Subsidiaries in
accordance with GAAP, provided that such amount shall be without regard
to the accumulated deficit as of March 31, 2007. 

- 42 -




ARTICLE VII. 
EVENTS OF DEFAULT

If any of the following events (“Events of Default”)
shall occur:

     (a) the Borrower shall fail to
pay any principal of the Term Loans when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed for prepayment
thereof or otherwise;

     (b) the Borrower shall fail to
pay any interest on the Term Loans or any fee or any other amount (other than an
amount referred to in clause (a) of this Article) payable under this Agreement,
when and as the same shall become due and payable, and such failure shall
continue unremedied for a period of five Business Days;

     (c) any representation or
warranty made or deemed made by or on behalf of any Loan Party in or in
connection with this Agreement or any amendment or modification hereof or waiver
hereunder, or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with this Agreement or any amendment or
modification hereof or waiver hereunder, shall prove to have been incorrect in
any material respect when made or deemed made; provided that any such
representation or warranty, if capable of being cured, may be cured by the
Borrower within a ten day period;

     (d) the Borrower shall fail to
observe or perform any covenant, condition or agreement contained in Section
5.2, 5.3 (with respect to the Borrower’s existence) or 5.8 or in Article VI;
provided that any Default under Sections 6.10 (a) or (b) with respect to
a calculation of any Future Test Period (but not any Historical Test Period)
shall only be an “Event of Default” hereunder upon a vote thereof by the
Required Lenders;

     (e) the Borrower shall fail to
observe or perform any covenant, condition or agreement contained in this
Agreement (other than those specified in clause (a), (b) or (d) of this Article)
or any other Loan Document, and such failure shall continue unremedied for a
period of 20 days after notice thereof from the Administrative Agent to the
Borrower (which notice will be given at the request of any Lender);

     (f) any event or condition occurs
that results in any Material Indebtedness becoming due prior to its scheduled
maturity or that enables or permits (with or without the giving of notice, the
lapse of time or both) the holder or holders of any Material Indebtedness or any
trustee or agent on its or their behalf to cause any Material Indebtedness to
become due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity;

     (g) an involuntary proceeding
shall be commenced or an involuntary petition shall be filed seeking (i)
liquidation, reorganization or other relief in respect of either Loan Party or
its debts, or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Loan Party or for a substantial part of
its assets, and, in any such case, such proceeding or petition shall continue


- 43 -




undismissed for 90 days or an order or decree approving or
ordering any of the foregoing shall be entered;

     (h) a Loan Party shall (i)
voluntarily commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii) consent
to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (g) of this Article, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for a Loan Party or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;

     (i) a Loan Party shall become
unable, admit in writing its inability or fail generally to pay its debts as
they become due;

     (j) one or more judgments for the
payment of money in an aggregate amount in excess of $100,000 shall be rendered
against a Loan Party and the same shall remain undischarged for a period of 45
consecutive days during which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to attach or levy upon any
assets of a Loan Party to enforce any such judgment; 

     (k) an ERISA Event shall have
occurred that, in the opinion of Required Lenders, when taken together with all
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower in an amount exceeding $250,000 from and after the
Closing Date; 

     (l) Completion shall not occur on
or prior to the 25 month anniversary of the Closing Date; or

     (m) any Change of Control shall
occur;

then, and in every such event (other than an event with respect
to the Borrower described in clause (g) or (h) of this Article), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Term Loan Commitments, and thereupon the Term Loan Commitments
shall terminate immediately, and (ii) declare the Term Loans then outstanding to
be due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Term Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and in case of any event with
respect to the Borrower described in clause (h) or (i) of this Article, the Term
Loan Commitments shall automatically terminate and the principal of the Term
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall automatically become
due 

- 44 -




and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower.

ARTICLE VIII.
THE ADMINISTRATIVE
AGENT

     Each of the Lenders hereby
irrevocably appoints the Administrative Agent as its agent and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof,
together with such actions and powers as are reasonably incidental thereto.

     The bank serving as the
Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Loan Parties or other Affiliate thereof as if it were not the Administrative
Agent hereunder.

     The Administrative Agent shall
not have any duties or obligations except those expressly set forth herein.
Without limiting the generality of the foregoing, (a) the Administrative Agent
shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing, (b) the Administrative Agent
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that the Administrative Agent is required to exercise in
writing as directed by the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 10.2), and (c) except as expressly set forth herein, the Administrative
Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to any Loan Party that is
communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any capacity. The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 10.2) or in the
absence of its own gross negligence or willful misconduct. The Administrative
Agent shall be deemed not to have knowledge of any Default unless and until
written notice thereof is given to the Administrative Agent by the Borrower or a
Lender, and the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement, (ii) the contents of any
certificate, report or other document delivered hereunder or in connection
herewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement or any other
agreement, instrument or document, or (v) the satisfaction of any condition set
forth in Article IV or elsewhere herein, other than to confirm receipt of items
expressly required to be delivered to the Administrative Agent.

     The Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the
proper Person. The Administrative Agent also may rely upon any statement made to
it orally or by telephone 

- 45 -




and believed by it to be made by the proper Person, and shall
not incur any liability for relying thereon. The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

     The Administrative Agent may
perform any and all its duties and exercise its rights and powers by or through
any one or more sub-agents appointed by the Administrative Agent. The
Administrative Agent and any such sub-agent may perform any and all its duties
and exercise its rights and powers through their respective Related Parties. The
exculpatory provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Related Parties of the Administrative Agent and any such
sub-agent, and shall apply to their respective activities in connection with the
syndication of the Term Loan provided for herein as well as activities as
Administrative Agent.

     Subject to the appointment and
acceptance of a successor Administrative Agent as provided in this paragraph,
the Administrative Agent may resign at any time by notifying the Lenders and the
Borrower. Upon any such resignation, the Required Lenders shall have the right,
in consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent which shall be a bank with an
office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Administrative Agent’s
resignation hereunder, the provisions of this Article and Section 10.3 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while it was acting as Administrative
Agent.

     Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any related agreement or any document furnished hereunder
or thereunder.

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ARTICLE IX. 
GUARANTY

     SECTION 9.1. Guaranty.
Guarantor hereby unconditionally and irrevocably guarantees to each of the
Lenders the punctual payment, performance in full and observance when due,
whether at stated maturity, by acceleration or otherwise, of the Borrower’s
Obligations (the “Guaranteed Obligations”) now or hereafter existing
under any Loan Document, whether for principal, interest (including, without
limitation, all interest that accrues after the commencement of any bankruptcy
proceeding of the Borrower, whether or not constituting an allowed claim in such
bankruptcy proceeding), fees, commissions, expense reimbursements,
indemnifications or otherwise, and agrees to pay any and all costs, fees and
expenses (including reasonable counsel fees and expenses) incurred by the
Administrative Agent and the Lenders in enforcing any rights under the guaranty
set forth in this Article IX, as they become due from time to time in accordance
with the express provisions of the Loan Documents. The Administrative Agent
shall be entitled to enforce this Guarantee for its own benefit and the ratable
benefit of the Lenders and each Lender shall be entitled to enforce this
Guarantee for its own benefit through the Administrative Agent in respect of the
Guaranteed Obligations owing to it but without duplication. Without limiting the
generality of the foregoing, Guarantor’s liability shall extend to all amounts
that constitute part of the Guaranteed Obligations and would be owed by the
Borrower to the Administrative Agent and the Lenders under any Loan Document but
for the fact that they are unenforceable or not allowable due to the existence
of an bankruptcy proceeding involving the Borrower.

     SECTION 9.2. Guaranty
Absolute. Guarantor guarantees that the Guaranteed Obligations will
be paid strictly in accordance with the terms of the Loan Documents, regardless
of any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Administrative Agent or the
Lenders with respect thereto. The obligations of Guarantor under this Article IX
are independent of the Guaranteed Obligations, and a separate action or actions
may be brought and prosecuted against Guarantor to enforce such obligations,
irrespective of whether any action is brought against the Borrower or whether
the Borrower is joined in any such action or actions. The liability of Guarantor
under this Article IX constitutes a primary obligation, and not a contract of
surety, and shall be irrevocable, absolute and unconditional irrespective of,
and Guarantor hereby irrevocably waives any defenses it may now or hereafter
have in any way relating to, any or all of the following:

     (a) any lack of validity or
enforceability of any Loan Document or any agreement or instrument relating
thereto;

     (b) any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Guaranteed Obligations, or any other amendment or waiver of or any consent to
departure from any Loan Document, including, without limitation, any increase in
the Guaranteed Obligations resulting from the extension of additional credit to
the Borrower or otherwise

     (c) any taking, exchange,
release, subordination or non-perfection of any of the Collateral, or any
taking, release or amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Guaranteed Obligations;

- 47 -




     (d) any change, restructuring or
termination of the corporate structure or existence of any of the Loan Parties;
or

     (e) except for payment in full of
the Guaranteed Obligations, any other circumstance (including, without
limitation, any statute of limitations) or any existence of or reliance on any
representation by the Administrative Agent or the Lenders that might otherwise
constitute a defense available to, or a discharge of, any of the Loan Parties or
any other guarantor or surety.

This Article IX shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by the
Administrative Agent or the Lenders or any other Person upon the insolvency,
bankruptcy or reorganization of the Borrower or otherwise (and whether as a
result of any demand, settlement, litigation or otherwise), all as though such
payment had not been made.

     SECTION 9.3. Waiver.
Guarantor hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Guaranteed Obligations and this Article
IX and any requirement that the Administrative Agent or the Lenders exhaust any
right or take any action against any of the Loan Parties or any other Person or
any Collateral. Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated herein and that the waiver
set forth in this Section 9.3 is knowingly made in contemplation of such
benefits. Guarantor hereby waives any right to revoke this Article IX, and
acknowledges that this Article IX is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.

     SECTION 9.4. Continuing
Guaranty; Assignments. This Article IX is a continuing guaranty and
shall (a) remain in full force and effect until payment in full of the
Guaranteed Obligations, (b) be binding upon Guarantor, its successors and
assigns and (c) inure to the benefit of and be enforceable by the Administrative
Agent and the Lenders and their successors, pledgees, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Lender may
pledge, assign or otherwise transfer all or any portion of its rights and
obligations under this agreement (including, without limitation, all or any
portion of its Term Loan Commitment and its Term Loans) to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted such Lender herein or otherwise.

     SECTION 9.5.
Subrogation. Guarantor shall not exercise any rights that it may
now or hereafter acquire against the Borrower or any other guarantor that arise
from the existence, payment, performance or enforcement of Guarantor’s
obligations under this Article IX, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of the Administrative Agent or the
Lenders against any of the Loan Parties or any other guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from any of the Loan Parties or any other guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security solely on account of such claim, remedy or right, unless and
until payment in full of the Guaranteed Obligations; provided, that Guarantor
shall not have any rights 

- 48 -




hereunder against the Borrower if all or any portion of the
Guaranteed Obligations shall have been satisfied with proceeds from the exercise
of remedies in respect of the Equity Interest of the Borrower pursuant to any
Security Document. In addition, unless and until payment in full of the
Guaranteed Obligations, any indebtedness of the Borrower now or hereafter held
by Guarantor is subordinated in right of payment to the Guaranteed Obligations,
and any such indebtedness collected or received by Guarantor after an Event of
Default has occurred and is continuing but prior to payment in full of the
Guaranteed Obligations, shall be held in trust for Administrative Agent on
behalf of the Administrative Agent and the Lenders and shall forthwith be paid
over to Administrative Agent for the benefit of itself and the Lenders to be
credited and applied against the Guaranteed Obligations. If any amount shall be
paid to Guarantor in violation of the immediately preceding two sentences, such
amount shall be held in trust for the benefit of the Administrative Agent and
the Lenders and shall forthwith be paid to Administrative Agent for the benefit
of the Administrative Agent and the Lenders to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this Article IX,
whether matured or unmatured, in accordance with the terms of this Agreement, or
to be held as Security for any Guaranteed Obligations or other amounts payable
under this Article IX thereafter arising. Upon payment in full of the Guaranteed
Obligations, the Administrative Agent and the Lenders will, at the Guarantor’s
request and expense, execute and deliver to the Guarantor appropriate documents,
without recourse and without representation or warranty, necessary to evidence
the transfer by subrogation to Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by Guarantor.

     SECTION 9.6. Maximum
Obligations. Notwithstanding any provision herein contained to the
contrary, Guarantor’s liability with respect to the Obligations shall be limited
to an amount not to exceed, as of any date of determination, the amount that
could be claimed by the Administrative Agent and the Lenders from Guarantor
without rendering such claim voidable or avoidable under Section 548 of the
Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law.

ARTICLE X. 
MISCELLANEOUS

     SECTION 10.1. Notices.

     (a) Except in the case of notices
and other communications expressly permitted to be given by telephone (and
subject to paragraph (b) below), all notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopy, as
follows:

     (i) if to
the Borrower, to it at 1 West Wetmore, Suite 203, Tuscon, AZ 85705, Attention of
Chief Financial Officer (Telecopy No. 520-292-0268);

     (ii) if
to the Administrative Agent, to Nedbank Limited, London Branch, 2 Lambert Hill,
1st Floor, Old Mutual Place, London EC4V, Attention: The Head: Mining and
Resources (Telecopy No. 44-707-002-3408), with a copy to Nedbank Limited, 135
Rivonia Road, Sandown 2057, Republic of South Africa, Attention: The Head:
Specialized Finance;

- 49 -




     (iii) if
to any other Lender, to it at its address (or telecopy number) as indicted to
the Administrative Agent.

     (b) Notices and other
communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative
Agent; provided that the foregoing shall not apply to notices pursuant to
Article II unless otherwise agreed by the Administrative Agent and the
applicable Lender. The Administrative Agent or the Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications.

     (c) Any party hereto may change
its address or telecopy number for notices and other communications hereunder by
notice to the other parties hereto. All notices and other communications given
to any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.

     SECTION 10.2. Waivers;
Amendments. 

     (a) No failure or delay by the
Administrative Agent or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Term Loan
shall not be construed as a waiver of any Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.

     (b) Neither this Agreement nor
any provision hereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Borrower and the Required
Lenders or by the Borrower and the Administrative Agent with the consent of the
Required Lenders; provided that no such agreement shall (i) increase the
Term Loan Commitment of any Lender without the written consent of such Lender,
(ii) reduce the principal amount of the Term Loans or reduce the rate of
interest thereon, or reduce any fees payable hereunder, without the written
consent of each Lender affected thereby, (iii) postpone the scheduled date of
payment of the principal amount of the Term Loans, or any interest thereon, or
any fees payable hereunder, or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date of expiration of any Term Loan
Commitment, without the written consent of each Lender affected thereby, (iv)
change Section 2.16(b) or (c) in a manner that would alter the pro rata sharing
of payments required thereby, without the written consent of each Lender, or (v)
change any of the provisions of this Section or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of


- 50 -




Lenders required to waive, amend or modify any rights hereunder
or make any determination or grant any consent hereunder, without the written
consent of each Lender; provided further that no such agreement shall
amend, modify or otherwise affect the rights or duties of the Administrative
Agent hereunder without the prior written consent of the Administrative
Agent.

     SECTION 10.3. Expenses;
Indemnity; Damage Waiver.

     (a) The Borrower shall pay (i)
all reasonable out-of-pocket expenses incurred by the Administrative Agent and
its Affiliates, including the reasonable fees, charges and disbursements of any
advisor or counsel for the Administrative Agent or any Lender (provided
that the Borrower shall not be required to pay for more than one counsel to
the Administrative Agent and the Lenders, other than special local counsel), in
connection with the syndication of the Term Loans provided for herein (which in
any event shall be conducted in accordance with Section 10.4(b)), the due
diligence, preparation, negotiation and administration of this Agreement or any
amendments, modifications or waivers of the provisions hereof (whether or not
the transactions contemplated hereby or thereby shall be consummated) and the
other Loan Documents and (ii) all out-of-pocket expenses incurred by the
Administrative Agent or any Lender, including the fees, charges and
disbursements of any advisor or counsel for the Administrative Agent or any
Lender, in connection with the enforcement or protection of its rights in
connection with this Agreement, including its rights under this Section, or in
connection with the Term Loans made, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of the
Term Loans.

     (b) The Borrower shall indemnify
the Administrative Agent and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Term Loan or the use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Loan Parties, or any
Environmental Liability related in any way to the Loan Parties, or (iv) any
actual or prospective claim, litigation, investigation or proceeding relating to
any of the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses are determined by
a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee.

     (c) To the extent that the
Borrower fails to pay any amount required to be paid by it to the Administrative
Agent under paragraph (a) or (b) of this Section, each Lender severally agrees
to pay to the Administrative Agent, such Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the unreimbursed
expense or indemnified loss, 

- 51 -




claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent in its capacity
as such.

     (d) To the extent permitted by
applicable law, the Borrower shall not assert, and hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions or any Term Loan
or the use of the proceeds thereof.

     (e) All amounts due under this
Section shall be payable promptly after written demand therefor.

     SECTION 10.4. Successors and
Assigns.

     (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that (i)
the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section. Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby, Participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Administrative Agent and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

     (b) (i) Subject to the conditions
set forth in paragraph (b)(ii) below, any Lender may assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Term Loan Commitment and the Term Loans at
the time owing to it) with the prior written consent (such consent not to be
unreasonably withheld) of:

     (A) the
Borrower, provided that no consent of the Borrower shall be required for
an assignment to a Lender, an Affiliate of a Lender, or, if an Event of Default
has occurred and is continuing, any other assignee; provided that any such
assignment to an Affiliate shall in all cases be subject to Section 2.17;

     (B) the
Administrative Agent, provided that no consent of the Administrative
Agent shall be required for an assignment of any Term Loan Commitment to an
assignee that is a Lender with a Term Loan Commitment immediately prior to
giving effect to such assignment; and

(ii) Assignments shall be subject to
the following additional conditions:

     (A)
except in the case of an assignment to a Lender or an Affiliate of a Lender or
an assignment of the entire remaining amount of the assigning Lender’s Term Loan
Commitment or Term Loans, the amount of the Term Loan Commitment or Term Loans
of the assigning Lender subject to each - 52 -




such assignment (determined as of the
date the Assignment and Assumption with respect to such assignment is delivered
to the Administrative Agent) shall not be less than $5,000,000 unless each of
the Borrower and the Administrative Agent otherwise consent, provided
that no such consent of the Borrower shall be required if an Event of Default
has occurred and is continuing;

     (B) each
partial assignment shall be made as an assignment of a proportionate part of all
the assigning Lender’s rights and obligations under this Agreement,
provided that this clause shall not be construed to prohibit the
assignment of a proportionate part of all the assigning Lender’s rights and
obligations in respect of one type of Term Loan Commitment or Term Loans;

     (C) the
parties to each assignment shall execute and deliver to the Administrative Agent
an Assignment and Assumption, together with a processing and recordation fee of
$3,500; and

     (D) the
assignee, if it shall not be a Lender, shall designate to the Administrative
Agent one or more Credit Contacts to whom all syndicate-level information (which
may contain material non-public information about the Loan Parties and their
related parties or their respective securities) will be made available and who
may receive such information in accordance with the assignee’s compliance
procedures and applicable laws, including Federal and state securities laws.

     (iii)
Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of
this Section, from and after the effective date specified in each Assignment and
Assumption the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 2.13,
2.14, 2.15 and 10.3) . Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 10.4
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.

     (iv) The
Administrative Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Term Loan Commitment of, and principal amount of the Term
Loan Commitment or Term Loans owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register 

- 53 -




shall be available for inspection by
the Borrower and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.

     (v) Upon
its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an assignee, the processing and recordation fee referred to
in paragraph (b) of this Section and any written consent to such assignment
required by paragraph (b) of this Section, the Administrative Agent shall accept
such Assignment and Assumption and record the information contained therein in
the Register; provided that if either the assigning Lender or the
assignee shall have failed to make any payment required to be made by it
pursuant to Section 2.5(c), 2.6(d) or (e), 2.7(b), 2.16(d) or 10.3(c), the
Administrative Agent shall have no obligation to accept such Assignment and
Assumption and record the information therein in the Register unless and until
such payment shall have been made in full, together with all accrued interest
thereon. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.

     (c) (i) Any Lender may, without
the consent of the Borrower or the Administrative Agent, sell participations to
one or more banks or other entities (a “Participant”) in all or a portion
of such Lender’s rights and obligations under this Agreement (including all or a
portion of its Term Loan Commitment and the Term Loans owing to it);
provided that (A) such Lender’s obligations under this Agreement shall
remain unchanged, (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (C) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 10.2(b) that affects such Participant.
Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.13, 2.14 and 2.15 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 10.8 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.16(c) as though it were a Lender.

     (ii) A
Participant shall not be entitled to receive any greater payment under Section
2.13 or 2.15 than the applicable Lender would have been entitled to receive with
respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower’s prior written
consent. A Participant that would be a Foreign Lender if it were a Lender shall
not be entitled to the benefits of Section 2.17 unless the Borrower is notified
of the participation sold to such Participant and such Participant agrees, for
the benefit of the Borrower, to comply with Section 2.15(e) as though it were a
Lender.

     (d) Any Lender may at any time
pledge or assign a security interest in all or any portion of its rights under
this Agreement to secure obligations of such Lender, including 

- 54 -




without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

     SECTION 10.5. Survival.
All covenants, agreements, representations and warranties made by the Borrower
herein and in the certificates or other instruments delivered in connection with
or pursuant to this Agreement shall be considered to have been relied upon by
the other parties hereto and shall survive the execution and delivery of this
Agreement and the making of any Term Loans, regardless of any investigation made
by any such other party or on its behalf and notwithstanding that the
Administrative Agent or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on the Term Loans or any fee or any other
amount payable under this Agreement is outstanding and unpaid and so long as the
Term Loan Commitments have not expired or terminated. The provisions of Sections
2.13, 2.14, 2.15 and 10.3 and Article VIII shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Term Loans and the Term Loan Commitments or the
termination of this Agreement or any provision hereof.

     SECTION 10.6. Counterparts;
Integration; Effectiveness. This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Agreement and any separate letter agreements with respect
to fees payable to the Administrative Agent constitute the entire contract among
the parties relating to the subject matter hereof and supersede any and all
previous agreements and understandings, oral or written, relating to the subject
matter hereof. Except as provided in Section 4.1, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.

     SECTION 10.7.
Severability. Any provision of this Agreement held to be invalid, illegal
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

     SECTION 10.8. Right of
Setoff. If an Event of Default shall have occurred and be continuing, each
Lender and each of its Affiliates is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other obligations at any time owing by such Lender or Affiliate to
or for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement or


- 55 -




any Hedging Agreement held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement or
such Hedging Agreement and although such obligations may be unmatured. The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.

     SECTION 10.9. Governing Law;
Jurisdiction; Consent to Service of Process.

     (a) This Agreement shall be
construed in accordance with and governed by the law of the State of New
York.

     (b) The Borrower hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Supreme Court of the State of New York sitting
in New York County and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement against the Borrower or its properties in
the courts of any jurisdiction.

     (c) The Borrower hereby
irrevocably and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement in any court referred to in paragraph (b) of this Section. Each
of the parties hereto hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court.

     (d) Each party to this Agreement
irrevocably consents to service of process in the manner provided for notices in
Section 10.1. Nothing in this Agreement will affect the right of any party to
this Agreement to serve process in any other manner permitted by law.

     SECTION 10.10. WAIVER OF JURY
TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.

- 56 -




     SECTION 10.11. Headings.
Article and Section headings and the Table of Contents used herein are for
convenience of reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in interpreting, this
Agreement.

     SECTION 10.12.
Confidentiality.

     (a) Each of the Administrative
Agent and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to (i) any assignee
of or Participant in, or any prospective assignee of or Participant in, any of
its rights or obligations under this Agreement or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
the Borrower and its obligations, (g) with the consent of the Borrower or (h) to
the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section or (ii) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a source
other than the Borrower. For the purposes of this Section, “Information”
means all information received from the Borrower relating to the Borrower or its
business, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by the Borrower; provided that, in the case of information
received from the Borrower after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

     (b) EACH LENDER ACKNOWLEDGES THAT
INFORMATION AS DEFINED IN SECTION 10.12(a) FURNISHED TO IT PURSUANT TO THIS
AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER
AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS
DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC
INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN
ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE
SECURITIES LAWS.

     (c) ALL INFORMATION, INCLUDING
REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER OR THE
ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS
AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL 

- 57 -




NON-PUBLIC INFORMATION ABOUT THE LOAN PARTIES AND THEIR RELATED
PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO
THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED A CREDIT
CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC
INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.

     SECTION 10.13. Interest Rate
Limitation. Notwithstanding anything herein to the contrary, if at any time
the interest rate applicable to the Term Loans, together with all fees, charges
and other amounts which are treated as interest on the Term Loans under
applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged,
taken, received or reserved by the Lender holding such Term Loan in accordance
with applicable law, the rate of interest payable in respect of such Term Loan
hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Term Loan but were not payable
as a result of the operation of this Section shall be cumulated and the interest
and Charges payable to such Lender in respect of other Term Loans or periods
shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon to the date of repayment, shall
have been received by such Lender.

     SECTION 10.14. Know Your
Customer Requirements. Each Lender that is subject to “know-your-customer”
requirements of any Governmental Authority, hereby notifies the Borrower that
pursuant to such requirements, it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender to
identify the Borrower in accordance with such requirements.

[Signature Pages Follow]

- 58 -




     IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.

	 	NORD RESOURCES CORPORATION
	 	 
	 	 	 
	 	 	 
	 	By: 	/s/ Wayne Morrison
	 	Name: 	Wayne Morrison
	 	Title: 	 VP & CFO 
	 	 	 
	 	COCHISE AGGREGATES AND MATERIALS, INC.
	 	 	 
	 	 	 
	 	 	 
	 	By: 	/s/ Erland A. Anderson
	 	Name: 	Erland A. Anderson 
	 	Title: 	 President 


[SIGNATURE PAGES CONTINUED ON NEXT PAGE]

[Signature Page to Credit Agreement]




[SIGNATURE PAGES CONTINUED FROM PREVIOUS PAGE]

	 	NEDBANK LIMITED, 
	 	       as
      Administrative Agent 
	 	  	  
	 	  	/s/ S. Orton 
	 	By 	 
    
	 	Name: 	S. Orton 
	 	Title: 	Authorized Officer 
	 	  	  
	 	  	/s/ Darren McDonnell 
	 	By 	 
    
	 	Name: 	Darren McDonnell 
	 	Title: 	Authorized Signatory 
	 	  	  
	 	  	  
	 	  	  
	 	NEDBANK LIMITED, London Branch,

	 	       as Lender
    
	 	  	  
	 	  	/s/ S. Orton 
	 	By 	 
    
	 	Name: 	S. Orton 
	 	Title: 	Authorized Officer 
	 	  	  
	 	  	/s/ Darren McDonnell 
	 	By 	 
    
	 	Name: 	Darren McDonnell 
	 	Title: 	Authorized Signatory 


[Signature Page to Credit Agreement]





	 	EXHIBIT A 
	 	to Amended and 
	 	Restated Credit 
	 	Agreement 


ASSIGNMENT AND ASSUMPTION

     This Assignment and Assumption
(the “Assignment and Assumption”) is dated as of the Effective Date set
forth below and is entered into by and between [Insert name of Assignor]
(the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Amended and Restated Credit Agreement
identified below (as amended, the “Amended and Restated Credit
Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.

     For an agreed consideration, the
Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee
hereby irrevocably purchases and assumes from the Assignor, subject to and in
accordance with the Standard Terms and Conditions and the Amended and Restated
Credit Agreement, as of the Effective Date inserted by the Administrative Agent
as contemplated below (i) all of the Assignor’s rights and obligations in its
capacity as a Lender under the Amended and Restated Credit Agreement and any
other documents or instruments delivered pursuant thereto to the extent related
to the amount and percentage interest identified below of all of such
outstanding rights and obligations of the Assignor under the Term Loan and (ii)
to the extent permitted to be assigned under applicable law, all claims, suits,
causes of action and any other right of the Assignor (in its capacity as a
Lender) against any Person, whether known or unknown, arising under or in
connection with the Amended and Restated Credit Agreement, any other documents
or instruments delivered pursuant thereto or the loan transactions governed
thereby or in any way based on or related to any of the foregoing, including
contract claims, tort claims, malpractice claims, statutory claims and all other
claims at law or in equity related to the rights and obligations sold and
assigned pursuant to clause (i) above (the rights and obligations sold and
assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as the “Assigned Interest”). Such sale and assignment is
without recourse to the Assignor and, except as expressly provided in this
Assignment and Assumption, without representation or warranty by the
Assignor.

	1. 	Assignor: 	 
    
	2. 	Assignee: 	 
    
	  	  	[and is an Affiliate of [identify
      Lender]1 ] 
	3. 	Borrower: 	Nord Resources Corporation




	 	 	 	 
	 	1 	Select as applicable.








	4. 	Administrative Agent: Nedbank
      Limited, as the administrative agent under the Amended and Restated Credit
      Agreement 
	  	  	  
	5. 	Amended and Restated $25,000,000
      Credit Agreement dated as of June , 2008 among Nord Resources Corporation,
      a Delaware corporation (the “Borrower”), the guarantor party thereto, the
      lenders party thereto (the “Lenders”), Nedbank Limited, as Administrative
      Agent, and the other agents parties thereto. 
	  	  	  
	6. 	Assigned Interest: 	  




	Aggregate Amount of 
Term Loan 
Commitment / Term
      
Loans for all Lenders 	Amount of Term Loan 
Commitment / Term
      
Loans Assigned 
	Percentage of 
Assigned Term Loan
      
Commitment / Term 
Loans 2 
	$ 	$ 	           
                         
             % 
	$ 	$ 	           
                         
             % 
	$ 	$ 	           
                         
             % 



     Effective Date:
_____________   ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND
WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

     The Assignee agrees to deliver to
the Administrative Agent a designation of one or more Credit Contacts to whom
all syndicate-level information (which may contain material non-public
information about the Loan Parties and their Related Parties or their respective
securities) will be made available and who may receive such information in
accordance with the Assignee’s compliance procedures and applicable laws,
including Federal and state securities laws.

     The terms set forth in this
Assignment and Assumption are hereby agreed to:

	 	ASSIGNOR 
	 	[NAME OF ASSIGNOR]
  
	 	 	  
	 	 	  
	 	 By: 	
	 	 Title: 	
	 	 	  
	 	ASSIGNEE 
	 	[NAME OF ASSIGNEE]
  
	 	 	  
	 	 	  
	 	 By:	 



	 	 	 	 
	 	2 	Set forth, to at least 9 decimals, as
      a percentage of the Term Loan Commitment / Term Loans of all Lenders
      thereunder. 



Exhibit A - Assignment and Assumption 
2




Title:

[Consented to and]3 Accepted:

NEDBANK LIMITED, as Administrative Agent

	By 	 	 
	Title: 	 	 


 


	 	 	 	 
	 	3 	To be added only if the consent of
      the Administrative Agent is required by the terms of the Credit Agreement.
    


Exhibit A - Assignment and Assumption 
3




ANNEX 1

STANDARD TERMS AND CONDITIONS FOR 
ASSIGNMENT
AND ASSUMPTION

     1. Representations and
Warranties.

     1.1. Assignor. The
Assignor (a) represents and warrants that (i) it is the legal and beneficial
owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of
any lien, encumbrance or other adverse claim and (iii) it has full power and
authority, and has taken all action necessary, to execute and deliver this
Assignment and Assumption and to consummate the transactions contemplated
hereby; and (b) assumes no responsibility with respect to (i) any statements,
warranties or representations made in or in connection with the Amended and
Restated Credit Agreement or any other Loan Document, (ii) the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Loan Documents or any collateral thereunder, (iii) the financial condition of
the Loan Parties, any of their Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the Loan
Parties, any of their Affiliates or any other Person of any of their respective
obligations under any Loan Document.

     1.2. Assignee. The
Assignee (a) represents and warrants that (i) it has full power and authority,
and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become
a Lender under the Amended and Restated Credit Agreement, (ii) it satisfies the
requirements, if any, specified in the Amended and Restated Credit Agreement
that are required to be satisfied by it in order to acquire the Assigned
Interest and become a Lender, (iii) from and after the Effective Date, it shall
be bound by the provisions of the Amended and Restated Credit Agreement as a
Lender thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Amended
and Restated Credit Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 5.1 thereof, as applicable, and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Administrative Agent or
any other Lender, and (v) if it is a Foreign Lender, attached to the Assignment
and Assumption is any documentation required to be delivered by it pursuant to
the terms of the Amended and Restated Credit Agreement, duly completed and
executed by the Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, the Assignor or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

     2. Payments. From and
after the Effective Date, the Administrative Agent shall make all payments in
respect of the Assigned Interest (including payments of principal, interest,
fees and other amounts) to the Assignor for amounts which have accrued to but
excluding the 




Effective Date and to the Assignee for amounts which have
accrued from and after the Effective Date.

     3. General Provisions.
This Assignment and Assumption shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which
together shall constitute one instrument. Delivery of an executed counterpart of
a signature page of this Assignment and Assumption by telecopy shall be
effective as delivery of a manually executed counterpart of this Assignment and
Assumption. This Assignment and Assumption shall be governed by, and construed
in accordance with, the law of the State of New York.

2